SD Cards are cheap these days, especially if you can find a 1 or 2 gig card. In my case, I upgraded my digital camera to an 8 gig card which I bought on sale for US $15, took the 4 gig card out of the camera, saved the images on it, then reformatted it and stuck in my PRS-650. Since I did that I have been loading all books to the SD card, with zero issues or problems using Calibre.
No real solid reason for doing this except for a feeling that the less that is in the main memory the faster the reader will go. And honestly I have no idea if this is a valid and provable argument. But I am very happy with the way that everything works.
Cheers
KNI
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