I\'ve installed JDK, Android SDK and Mono Android for Visual Studio 2010, I\'ve created an empty solution and I got the emulator up and running with Android 2.3.3 - so far so go
This problem appeared for me when I installed Facabook app on my phone. so I uninstalled it and problem solved.
Possible Problems :
Solution :
I had this problem even with 1GB of free space and an .apk of 1,5Mb. What I did was building an .apk and moving it to data/app folder. This worked for me. The problem is that I think your device must be rooted in order to access this folder.