I'm pretty sure that with the newer firmware the larger SDHC cards will work, but as gwnevans says--you don't need that much room.
I do have a 2gb card in mine, but I've only got about five books on it. The rest (280 at last count are all on the reader's internal memory.) I put the PDF books I have on the card, because they take up significantly more room than LRF or ePub files. If possible, I try to stick with LRF/ePub.
Happy reading!
dordale