Guys, I will create a separate thread later on with details on how to do all this but replacing the Samsung storage on the Kindle 2 with a higher capacity one is definitely possible. I am holding in my hands a Samsung 8 GB NAND that was originally inside a Palm Pre. I have not done it yet but I can see that I can just put this right back in the Kindle 2.
I can now get the Kindle 2 from 2 GB to 8 GB. Let's see how the process of soldering this goes. Now, it is just a matter of finding the active pads. Fortunately, the 29 active pads are shown here
http://www.samsung.com/global/busine..._MoviNAND.html. Also, notice how there are larger capacity NAND up to 32 GB there. In theory, you can even install the 32 GB one depending on the size and contact connector. Since I don't think it's worth doing this for the Kindle, I am not even going to considering anything higher than 8 GB (because of the cost factor), unless, of course, I could find one for free.
I warn you guys that this project requires at least some basic BGA soldering skills as well as the tools required. However, I can almost guarantee that most technically inclined people could do this if they put the required time and effort. There are many BGA soldering tutorials on YouTube.