It wouldn't be wasting space, it would be impacting the use of the device as advertised. If you buy an 8GB device you don't expect to lose more than half of that to the OS and files that cannot be deleted UNLESS the specs specifically say what the usable space is and if the specs do say "XGB usable" for a given device then it would be false advertising if Apple forced a user to download a 3GB file that they didn't want, which reduced the advertised usable space.
3GB of lost space is a valid claim, if his phone loses that usable space due to Apple's action then his phone is basically like a lower-spec'd phone, which is cheaper. If space were free then the 8GB phone would be the same price as the 64GB phone. If his phone is effectively going to have the same capacity as a cheaper phone then he is within his rights to be compensated for the difference, especially when there was no warning or notice given that the user would lose that space unless they upgraded and they had no choice about whether or not to download it.
Yes, because it's completely reasonable to force someone to do an upgrade that they don't need or want and if they don't want to upgrade then it's completely reasonable to have the unnecessary and unwanted data taking up valuable space on their device. It's borderline ransomware.

"Upgrade or else I'll hold this space hostage!" Completely reasonable...
Apples and oranges. Try again.
I agree that he should've sued Apple instead, or if he wanted to get Tim Cook's attention then listed both as defendants.
I also see a lot of people make poor assumptions in this thread.
- This is small claims court, attorneys are generally NOT allowed. You come and you present your case yourself.
- iOS7 has a number of problems, my wife, who has loved her 4S since he got it, is now getting frustrated with the constant problems with iOS7. Her email accounts just disappear and opening Mail prompts her to set up an account. If she reboots then her accounts come back. She's had problems with iTunes purchases and downloads, she's had problems with text messages not sending, she's even had her volume buttons stop working until rebooted. This is one of the worst iOS releases that I can think of.
Anyone here that says "Just upgrade and get over it" needs to stop assuming that they know what's best for other people, you don't know their situation or needs. A lot of clueless people in this thread...