I would bet that if the upgrade had been Kindles rather than iPhones & iPod Touch, the slots would be freed up much more quickly -- Amazon could purge the prior owner's content as soon as the Kindle was registered to a new owner. It might not be so easy to eliminate unauthorized content on a deregistered Apple device.
Read the best books first, or you may not have a chance to read them at all.
-- Henry David Thoreau
Currently reading: Kiln People by David Brin (MM Paperback)
... A Play of Isaac by Margaret Frazer (Kindle)
... Birthright by Nora Roberts (Audio CD)
Books read in 2009: 117