You can resolve this resizing the userdata.img file located on your avd emulator folder:
cd ~/.android/avd/yourEmulatorName
e2fsck -f userdata-qemu.img
rm userdata-qemu.*
resize2fs userdata.img 1024M
Now start your avd emulator again and you'll see that it's storage was increased. Windows users can do this with Cygwin enabling the "e2fsprogs" package on install/update.
P.S.: You must change 1024M to your wanted value of internal storage.
UPDATE
The e2fsck is not really necessary, as pointed on comments by @BoD.
So all you need to increase the internal storage is run two commands on your target emulator folder.
In other words, you must:
- Delete the old emulator images
- Resize the userdata image file to wanted value
cd ~/.android/avd/yourEmulatorName
rm userdata-qemu.*
resize2fs userdata.img 1024M