This trick is courtesy of Fedelm Cruithni.

Let's say you uploaded a 20K image to your gallery and then deleted it. The image is gone, but your gallery still thinks you've used 20K and it won't allow you to upload another image. What to do?

This bug seems to happen when you only have one image in your gallery. What Fedelm suggests is, if you only have one image in your gallery, do not delete it. Upload a small second image first, then delete the unwanted image. Then, before you delete the small image, upload the new image.

Unfortunately, if you don't know about this trick and you do delete the only image in your gallery, you will be stuck with this ghost. To our knowledge, the bug never goes away and no "fix" has been suggested.