Since it's the install package itself that gobbles up so much space, the easiest way to get around the issues is to plug your phone or tablet into your computer and update straight from iTunes. That way, your phone won't get stuck with having to bear the update's weight and you should have more than enough room for the measly 1.1 GB of iOS 8 itself. Simple!
It takes a lot of space to shuffle files around if you opt for the over-the-air update, but that’s not the permanent footprint. I did the update by connecting to iTunes on the desktop; on my 16GB iPhone, I had 1.5GB free before the update, 1.2GB after.