tmel173 - The 9700 has 256MB of flash memory, while the 9000 has only 128MB of flash memory. Flash is the memory that the BB O/S can use for apps - so 9000 has half as much. Except it's worse than that - the O/S takes up so much of the memory that there is less than 30MB left on a 9000 for Apps (and your device will slow down if you use up much more than half of this) - while 9700 has over 100MB free for apps.
The rest of the 1GB internal memory in a 9000 cannot be used for apps, so I'm not sure how it's any better than micro SD card memory.
BlackBerry - BlackBerry | Wireless Handheld Devices, Software & Services from Research In Motion (RIM)
I think RIMM does a poor job of communicating this - there has been much confusion about this esoteric point - though not so esoteric for someone who wants to install more than a small handful of apps. You're not likely to run out of memory for apps any time soon on a 9700, though perhaps a couple years from now bigger apps will be the norm and 256MB won't seem like much.