While the spec for that phone is pretty hot, the area where it seems to have been lacking is storage (320 MB). I have recently started using another (cheaper) Xperia model, the Xperia Tipo. It was launches around 15 months later than the Arc, has lower 'quality' features in a number of areas, but is more 'up to date' in a few areas such as wi-fi / storage, and has Android v4 instead of v2.3 (and the bonus part was that because the price has come down as it is now classed as an 'old mobile', it was only 50 quid).
See these comparisons: GSMarena (for technical specs) and Compare Cellphones (for pros and cons of each).
I was getting "low on storage" nagging messages all the time on my various (cheap-ish) Samsung mobiles (Ace, Europa and Mini) but all those complaints stopped when I got the Xperia Tipo. While I agree with HabbaDabbaDoo that there may be some storage that can be freed, I think it might be time to 'bite the bullet' and consider a replacement phone.
Much depends on which network you are with, but the Xperia T (which was launched around 2012Q4 and consider "out of date" by 2013Q2, so has been reduced considerably as networks want to get them out of warehouses) may well be worth looking at. It's in a similar price range on the GSMarena scale, has better specifications in almost all areas (apart from battery life if playing music).
See the comparisons (GSMarena and Compare Cellphones) and then look for the best price deals (for example on buymobilephones.net, where you can get the Xperia T from about 14 pounds a month (limited minutes etc, on O2) to 25 quid (Three, unlimited data, 2000 minutes, + 5000 "3 to 3" minutes, and 5000 texts) or pay more each month, and get a "free" gift like an iPod Touch etc...