More details please. What do you mean you can't delete your photos from photo stream? Is it because it's giving you an error or something or because you need them and cannot delete them? Have you tried plugging into iTunes to free up some space?
If you lack storage just do the upgrade through iTunes. I do agree if you are that limited in space you may want to transfer them to your computer if possible. How much music do you have? Maybe iTunes Match is a fit for you