Abisha--
One of the features of the new firmware for 505 is listed as:
"Support for SDHC memory cards that have a capacity of more than 4 GB".
I haven't tried anything bigger than my 2GB SD card, which works fine for me. I know that some people have problems with battery life when using SD cards. I don't know if my battery life is less than it would be if I didn't have the SD card in, but my battery doesn't get below 2 bars even after a couple of weeks of reading 1-3 hours/day. I don't have a lot of stuff on my SD card because as Catire points out, you can fit a lot of books on the internal memory.
Hope this helps!
dordale