The way I saw it, the SD card makes it up to the customer how much storage they want on their phone. They can buy the phone with 4GB, but upgrade to 32GB if they want. The problem is, of course, that 32GB cards are ridiculously expensive and hard to find, so you automatically limit most people to 4, 8, and 16GB capacities.

I would be more upset about it if I used my phone to listen to music or watch video, but I use my Zune HD for that, so I don't really care about the SD card stuff.

Another advantage of the card is that when I changed phones, all I did was pop the card out of the old phone and into the new one, and all my apps had their data right there. I didn't lose my save game for Robo Defense, for example.