Unfortunately, with the way external SD storage is implemented on the A500, it is not usable by apps. You can move files back and forth with a file manager, but it is not very useful. Definitely not the same as getting a 32GB tablet.
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Having said that, I've loaded my A500 with dozens of apps and 4 games. Not including downloaded podcasts, I've only used 1GB. I see no reason to get anything more than a 16GB tablet today.
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With the gallery synced to Blogger, Picasa, and other cloud sources I don't keep pictures on it.