I just did a fresh install of 7.10. After installing the Nvidia driver
and allowing updating, there is 550 MB free on a 3.2 gig drive. 

Fire up Synaptic, enable the unselected Partners, Proposed, and
Backports in repositories, then select 'Delete downloaded packages
after installation', and update again: 560 MB free.

Note that it did need to download about 200 MB in packages to do that,
so I think it's fair to say the new minimum space requirement is 3 gigs.

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