After the initial change to IOS, you may have to initiate the next update via the CLI using the archive command (don't forget to shut down the radios first, use the /overwrite and /force reload (it's ALWAYS best to read the Release Notes for gotchas).
The GUI routine for the update can't find enough storage and won't delete the existing image.
I believe that once you get into the higher 12.2's or 12.3's you can use the GUI for the updates again.
Good Luck
Scott