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OK the 64MB SDRAM works like how you described it (just like a PC).
The 128MB Flash ROM is partitioned up like a hard disk. The ROM uses one part of it, the radio another, and there are some other small parititions for other stuff. The rest becomes your "storage memory" which you use to install apps and store things like photos, your PIM data, etc.
So by building apps into the ROM with the kitchen you are including them in the ROM partition, thus saving space in your "storage memory" partition for other uses.
Hope that helps clarify.
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