Why is the memory usage on my iPhone being reported incorrectly by iTunes? I'm puzzled by what iTunes is reporting about my iPhone's memory usage:



Clearly this doesn't quite add up, and it's hard to manage my memory use without having an accurate summary of what's really going on. 

What could be causing this and how might I fix it?
Given the clarifications in the comments, it sounds like iTunes is mis-reporting the free space on the phone.

Unfortunately, this may be an as-yet-unresolved bug in iTunes: there seem to be a heap of threads on discussions.apple.com describing this problem, with even recent posts lacking resolution. Here are two of them:

https://discussions.apple.com/message/16756343#16756343

https://discussions.apple.com/message/12869025#12869025

It may be worth watching those threads to see if there's a resolution - hopefully, if the bug's well-known by now, an upcoming iTunes version will fix it.