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Unless you plan on reading a ton of books at once, switching between all of them, I wouldn't even bother with the SD card. I've had a 1GB card in since I bought it, filled it up initially with about 50 titles, saw how much a PITA it was to flip through all of the and whittled it down to about 25-30 (only actively reading one at a time, ocassionally browsing a few others).
The only really good uses for the SD are: a) quick way to put books on your Reader w/o having to connect it to your PC; i.e., pop out card, inject/remove books, pop back in, and go, b) useful for large PDF's that are too big and may fill your local storage space, and c) good for MP3's, if you want to use it for that (I haven't used that feature once).
I'm all for converting between formats, and have already done so with a few LIT's & PDF's, so don't feel that you're limited to the Connect Store (that's what $ony wants you to believe, they have to milk this cash-cow while they can). I've been overly impressed with the quality of tools you can find through this forum, so check back often (besides, it's adictive!).
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