Some comment updates...
For 2GB version, only can use 1.03GB for install apps. For people who like to install much apps & games, should go for 16GB version. The 1.03GB treat as internal SDCard (so except internal ROM, here is the only place that you can install apps). The external SDCard slot only can use to store files, but not apps.
some China site mentioned that it can manually swap internal SDCard and external SDCard location to break this limitation, but I didn't test. For me, 1GB is enough for apps (only to view PDF / powerpoint, eBook, watch video, web surfing etc...)