I use a 2gig sandisk card. Data transfer is quick (I use sandisk cards in lots of other devices and always been good).
On the card, I can fit roughly 3 compressed movies, a couple of albums, a stack of pictures, all my web browsing favourites etc, and an epsiode of phoenix nights for crappy bus journeys.
You can get them for around �40.
Might even use it for games one day!
what...the? - I just traded my PSP in, for some reason they don't take memory cards. So I now have a spare 2Gb SanDisk memory card. Send me an email and I will send it to you.