If you are frustrated with the 4 GB or 8 GB limit on your iPhone, I had written earlier this month that Dot.Tunes had an innovative way of solving your space problem by streaming any song or playlists from your iTunes library to your iPhone. However, for this to work you needed to buy the iPhone Dot.Tunes plug-in which costs $20.
In case you are looking for a free option then folks at Embraceware Software have figured out a not so neat way of solving the space problem but for free.