We introduced Android 2.2 Froyo quite a while ago. And now the Android Developers Blog gave us some details about this cool new feature of Android 2.2!
Seems like we are no longer limited by the internal memory of the phone, since we are now able to put our apps on the phones external memory.
Their Developer Blog has a nice little paragraph about its good and bad sides:
The advantage of installing on SD card is easy to understand: contention for storage space is reduced. There are costs, the most obvious being that your app is disabled when the SD card is either removed or in USB Mass Storage mode; this includes running Services, not just interactive Activities. Aside from this, device removal disables an application’s Widgets, Input methods, Account Managers, Device administrators, Live wallpapers, and Live folders, and may require explicit user action to re-enable them.
Think wisely before installing an app on your SD card