I just updated Android SDK to version 21 and trying to start emulator. I am using Nexus 4 with CPU Intel atom (x86) 768 RAM and 524 internal storage. Emulator starts fine but it
You have to go in your android folder e.g. on OSX ~/.android/avd/{YOUR_AVD_NAME} and edit file config.ini.
Just add or modify row disk.dataPartition.size = YOUR_SIZE
e.g. disk.dataPartition.size = 1G
Then you may have to wipe your emulator's disk.
Go to AVD manager on your android studio. click on the pencil icon of the virtual device. on the pop up window click on advanced settings at the bottom. scroll down to memory and storage and alter the default definitions of MB/GB etc.
Open AVD Manager --> Wipe Data
emulator -avd "Name" -partition-size 500
This solved the issue for me.
Update on how to execute above command:
cd [android SDK directory]/tools/
./emulator -avd nameOfAvd -partition-size 500 &
emulator -avd nameOfAvd -partition-size 500
REinstal the emulator.. Go to your AVD location and delete all the files in avd folder( C:\Users\acer.android\avd ), then Go to android studio AVD Manager and install a new emulator. ( but this will erase the current emulator so, you'll need to download it again..)