Once you finally have Froyo, you can start putting apps on the SD Card to conserve internal phone memory. People with some of the new Android Phones (Evo, Incredible, Droid-X) have 8GB of internal phone memory for apps but those with only slightly older phones like the Droid only have 512MB of flash storage. Even with Froyo it is only possible if the app developer allows it. I haven’t tested it but I’ve read that it is possible to other apps to the SD card if you have root access and use Titanium Backup.
Which apps can be stored on the SD Card? Previously the only way to find out which apps could be moved to the SD card was to click on each app in the settings/applications/manage applications/ and click on each application to see if the move to SD card button is available. If you only have a few apps this fine, but can be tedious with many apps. Sdmove in the market displays a color coded status of of each app on the phone. A good explanation of the app can be found at how-to-move-apps-to-the-sd-card-on-android-froyo-the-easy-way-with-sdmove/ on androinica.com.