Let's try a reset first. Press and hold the power button and the home button together until you see an apple logo. That should clear up some unused memory.
If that does not give any more free space, The only way to reduce the size is to delete some photos and videos. Do you have a lot of photos in the iPhone?
Before deleting, you may transfer all photos from the iPhone to a computer so that they are saved.
Hope this helps. Let me know if you find any difficulty.