Well, yes and no
When I first got the NC, I was spending a lot of time converting my sony collection (almost all .lrf files set up all spiffy margin/font-wise from Book Designer) into epubs for the NC via calibre...setting the cover art etc. And when I got to a few hundred (I have around 1500+ on the 650) I started noticing a bit of a slowdown on the NC. So as an experiment I thought I'd free up all the internal memory by resetting the NC and just storing all the books on the sd card since I wasn't that far along in the whole conversion process yet.
It went well, and did seem a bit faster so I was happy as a clam (I REALLY love the color cover art) as I re-made all my shelves and placed the books where I wanted them. When I turned the unit off and restarted it and found all the shelves empty, it was very disappointing. A few people on the B&N forums have experienced it and another person on here so I am guessing it's a software issue rather than a defective unit.
Since they now are saying that the collections/my shelves feature is only intended to be used for internally stored books, I am not sure what to do. Stick with the sony and having my entire collection on-hand, or go with a smaller collection and the NC (I mean I REALLY love the color cover art
)