Have a look here, it appears that for some, 64MB is not enough to upgrade, most likely because the image has grown slightly over time.
http://forum.m0n0.ch/index.php?topic=4057.newWe should add a memory check so that you don't end up with a broken router when trying to upgrade, though it would be better if the upgrade just succeeded even with low memory.
you could backup your config and reinstall with the newer version, then restore your config.