First DO NOT panic.
*breath*
Second tell the person that you were trading with NOT to move (not that it's really important that they don't walk around but you must trade with them immediately)
Next, clear out space in your inventory.
Last Open a trade with them again and wait about 30seconds... so far 100% of the time the items just popped back in and was able to decline out with the items falling into the new found space I created.
Just make sure that neither of you start a trade with anyone else before you do this. Not sure if the items will poof completely or just hang out. May test this tonight to verify what happens then.
**edit because my spelling sucked badly today =)