Lenovo took notice of the problems users were having, quickly running out of memory after installing just a few apps, and sent out an over-the-air update. The update increases the internal storage partition from 512 MB to 1.5 GB, giving some much needed breathing room for applications. The update will wipe all user data, so make sure to backup before accepting it.
While 1.5 GB is better, it's still not ideal. The best solution would be to merge both partitions into one, so the complete 16 GB of storage could be used as the primary place to install apps and games. According to Lenovo, increasing the internal storage to 1.5 GB was all that could be done at this time due to "technical reasons," but they " are also looking to change the whole storage to be integrated in one partition." One this is done, this tablet's storage problems should finally be over.