Microsoft's Joe Belfiore just commented on Twitter "It was a "packaging problem" with the update. Try again and it should work." He then goes on to say "Still working on the "low storage" install prob 80188308. Note, this is not USER storage you can clear- it's install partition. Sit tight."
Microsoft may have finally addressed installation problems with the Windows Phone 8.1 Update 1 Preview for Developers. The issue initially started when Update 1 for Windows Phone 8.1 Preview began on Monday and a few users downloaded the update, but it would not install. The associated error code is 8018830f, and Microsoft's Joe Belfiore tweeted that they were investigating.
Ever since yesterday, we have received a few tips that those with the previous 8018830f error are now getting Update 1 to their phones. However, within the last hour we have received multiple tips from users who are now being alerted to the update being available, along with a successful installation. The fix may also address those with the even more rare 80188306 error.
Heading into our 8.1 Update 1 forums, there are others also confirming the fix is in place. However, not everyone with the reported error is getting the update, so it is not clear if there is a rolling fix in place or there are other factors in play. One common denominator for a successful update seems to be having Lumia Cyan installed, in addition to being mostly Lumia 925s.
We field it to you though. Let us know in comments if either the 8018830f or 80188306 errors have been resolved for you and your phone. Likewise, jump into our 8.1 Update 1 forums for more information or if you have any questions.