First a little explanation on the storage (you might also check the tag wiki of the storage tag for a short introduction):
Why can't I use the free space available at
/system partition holds the often so-called "ROM", i.e. the Android core system (including the pre-installed apps, see bloatware). By default, it is mounted read-only for several reasons (including "security", so no app can tamper with anything here -- and the user cannot accidentally render the system unusable). This is also why a factory reset will present you with a "virgin system": it will not touch this read-only partition.
Being mounted read-only makes it clear you cannot write things onto this partition -- which answers the question why you cannot make use of the "free space" it has. You might wonder why a read-only partition then is not "sized appropriately" -- but it is: it just takes into consideration that additional space might be needed for a system update. Future Android versions might (and most likely will) need more space, also providers might want to add more bloatware...
Why is there so little space at
To put it in simple words: 180MB is all that was left after taking away the ~200MB for
/system. The Galaxy Mini S5570 isn't a high-end device. And before you ask: No there's nothing you can do to increase the amount of overall storage available to
/data (at least nothing easy -- though some geeks might think of creating a bigger partition on the SDCard and mount it as
/data, this is nothing simple and also not without side-effects).
What can be done?
Nothing much. If your device is rooted, you could think of using a bigger SDCard (your device supports up to 32GB), and moving stuff over there with things like link2sd or even Data2SD. You can regularly clear your apps' caches and do some other cleanup. Or you can simply go for a new device which offers more storage (and more RAM, and a faster CPU).
I know it's not very satisfying that a device, just being 2 years old (the S5570 was released to the market in February 2011) already is unable to keep up with daily needs. But unfortunately, 180MB storage (and 384MB RAM) really is not much to play around... So all that currently remains is to refer you to the most faqs of the "insufficient storage" tag to find a solution until you can get yourself a new device. See especially: