iOS apps take up more space than advertised?

I would like to download "RAGE HD" which the App Store says is "643 MB", but after clicking "BUY NOW" there is a message:

There is not enough space to download "RAGE HD". Please delete some photos or videos.

But my "About" screen says I have "898 MB" available. How much extra space should I need to be able to download this game?

You have to take into account that the exact number is an approximated value and that the device needs additional space to install the application. I’m guessing that although the application says it’s 643Mb, it really uses some more when it gets installed. You’re really pushing the limits of your iOS there :)

Due to the way items are synced to the iPod and iPhone, you need a bit more space than the size of the app. So although the app may only take up 643MB, you'll actually need more to sync it.

I don't know the answer to your question in general, but as far as RAGE HD goes (all numbers on my Mac):

Size shown in Finder: 779.7 MB
Size shown in iTunes (Library > Apps): 743.6 MB
Size needed to install on my iPad (Devices > my iPad > Apps): 1.18 GB

                                           I think that's your answer, there   ↑