A certain amount of storage is needed to manage the download itself. The new app is too big to leave the necessary overhead. If you want it, you'll have to free up some space. I'm guessing double the memory the app requires, off hand, but that is a guess.
Or, if you don't mind using iTunes and the computer to sync, you can download it on the computer in iTunes then sync it to the device.
I used to run into this with my 1.5 GB navigation app all the time. Every update I had to download on the computer, or delete stuff off the iPad. Fortunately the developers got smart and started including the maps as downloads in the app instead of including everything in the app itself.