After doing some top-notch detective work, the developer found that the storage issue had to do with the methods MediaLibrary.SavePicture and MediaLibrary.SavePictureToCameraRoll. Both are used when saving images to Windows Phone's pictures hub, and as it turns out, a copy of each image is saved in isolated storage. Code can be written to delete the file in isolated storage since it takes the same name as the one used by MediaLibrary.SavePicture with an additional 'jpg' added to the end and with periods replaced by underscores.
The isolated storage file appears only with.jpg pictures, not with.png shots. The bug is not device-specific but only appears on Windows Phone 8, and when using Nokia's storage tool, the files show up as dedicated storage rather than "other" or as a temporary file. In the meantime, if you are saving a picture to the picture hub, Gosse suggests that you "make sure you’re deleting the temporary files in the isolated storage afterwards." Hopefully we will see a fix from Microsoft soon because those with low-end devices are struggling with small amounts of storage.
source: KevinGrosse via WPCentral