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Does android OS allow the application resources (images, video files, etc) to be stored on the SD card and just the code on their internal memory ?

[...] Second, we all know the Android Market doesn’t have as many apps as the App Store, but maybe that’s a good thing since Android 2.0 still doesn’t fix its app space limitation, leaving Droid with a paltry 256MB for apps according to AndroidandMe.com: [...]

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Well, hindsite is 20/20, but of course googles answer to the market was android 2.2. The thing is when you have an Open Source OS, everyone can propose features, so it was only a matter of time before a flaw was fixed with a solution, Same reason Linux progresses in leaps and bounds, Open Open Open, even Microsoft is ‘opening’ up as much as possible. But i DO love my 8GB + 16GB DroidX =D

have you really removed your SD card in mid ANYTHING, that is such an ignorant observation. Your SD card is BEHIND your battery. YOU do not regularly remove it. Storing items, APPS .apks etc on the SD card free up internal memory, you do not store your home screen, widgets, or other startup items. Games work just fine off the SD card, the new APPS2SD feature of froyo 2.2 works very well. I have had it on my and my wifes android for about a month. I run 235 apps on my android and most are on the SD card not the phone and no issues. Sure if you purely want an idiot resistant phone the current setup is not suited for you, but if you want an idiot resistant phone you probably need the jitterbug phone with only 3 big buttons.
iPhone lovers or trend followers will do what they will, but the open nature of the android OS makes is a lower priced, easier to upgrade, more open free, and in the long better OS than iOS can ever be. The nature of how it is done mandates that. Whenever the freedom of creativity is over controlled you get less productivity. Most small creative companies find this out when they get bought out by large cumbersome companies. Apple has struggled with this for years, that is why steve came out of re-firement. The iPhone is a perfectly fine phone, it does not though nor will it have the open source android enjoys.

Froyo does take care of the app issue.. Apps2SD moves most apps to your SD card, the 16GIG or 32Gig card…
I am running a motorolla droid A855 with 2.2 froyo and 235 apps installed on it.
Quadracent score of 1325 (if you do not know what that means it doesnt matter, but it is as fast as the newest nexus running 2.2)
Battery life is decent, it is a computer tweakers dream and I have my wifes setup for ease of use (for non tweakers)
What about chrome to phone? That absolutely rocks, anything I find online I can send to my phone that way, even directions. And it multi-tasks just fine out of the box.
I have wifi tether also—– so my laptop gets internet from my phone (verizon is not charging more for that ) I also have usb tether if I want a locked connection.
There are many pluses to this OS. The thousands of open source developers compared to ANY other smart phone OS is amazing.
iPhone will have its day, Macintosh did, Texas Instruments did, IBM did. As for me my android phone works great, FRING gave me Voice over IP (skype) while I was in Haiti on missions without needing an international phone. The apps are plentiful enough, yes there is not 1million plus apps, but the 100K+ cover what I have needed and more and no company telling me what app I can and cant have.. So annoying.

[...] dirty little secret may finally be put to rest soon. Ever since the G1 was released, users have been asking Google to [...]

I think that’s not an issue. That can be managed by smart programming. The executable code resides in internal memory and data on the sd card once the program launches. So if the user removes the sd card in the middle of the game and tries to run the game again, the games just starts from the beginning default and cleans ups the mess automatically. The pure exe is not touched only data is being written during the game which is disposable data…

[...] Android has a dirty little secret, it is the limited internal storage found on most phones. Google has said they are working on an encrypted solution to allow [...]