If you check out this page:
http://www.pandigital.net/?PageID=335#MicroSD_Removal
It gives detailed directions on removal and replacement of the micro SD card.
I took out the stock 1GB card and replaced it with a clean (Fat32 freshly formatted) 8GB card. The firmware update to the android open platform (1/14/2011) will partition and load the required files.
I am extremely happy with the Pandigital firmware without any hacks applied. I have been trying out different readers available including the Cool-Reader available here. Although I have to admit, I have been loading different games and trying them out more than reading right now.
Without going into the system deeper than I am comfortable with, the market place is not available. However, the group at slatedroid are working on a user freindly way of doing this.