<<Disclaimer, I'm still a bit new myself and I'm talking completely out of memory here... ie my ass... so if I get any of the details wrong, please correct me... I know you will anyway... I'm just abandoning any pretense at accuracy here.
>>
Well, first off you can free up a lot of memory by deleting a lot of the sprint crapware.
The audible demos eat up a LOT of memory... just go to your program files folder and look for it... it's pretty obvious. That's the quick and dirty method. You can remove what little remains of it after that by going to "windows\startmenu\Programs" and finding the corresponding shortcuts so you don't even need to look at it in your programs folder.
You can get rid of this stuff by going getting a free program called "total commander" which can read the extended rom... you can then launch the crapware program installers... if launched a second time they UNinstall instead of installing. Frankly, I think it's just easier to root it out on your own. That leaves a few errant registry settings but they're not really relevant once the programs are dead.
Ultimately the best way to free up space however is get the Kitchen Rom offered on this forum.
Here's what you have to know about the storage on your phone. It's broken into three separate bits. Each bit is ENTIRELY separate... that is putting something in one part of memory has no effect on the amount of space available in another part of memory. If your rom has almost nothing in it, that won't free up extra space in Main memory. The ROM is separate, the Extended ROM is separate, and Main Memory is separate. Think of them like three distinct disks.
Part 1, The ROM: Contains OS, Drivers, and some basic Microsoft/HTC programs. Rom stands for "Read Only Memory" which means that unless you're in rom flashing mode this information CANNOT be changed. The Rom is larger then any other partition in your phone's memory. So if there is some program, skin, etc that you want installed on your phone that takes up a lot of memory, its best installed in the ROM. I think the max for the rom is something like 75-85 MBs.
Part 2, Extended ROM: Contains carrier specific set up files. For example all the crapware that sprint installs on your PPC after boot is put here. I have no idea beyond simply laziness that extended rom even exists. What it's for is installing a few programs onto the PPC after a hard reset. Ideally, these should already be included in the Rom. In any event, you should delete the three or four crapware installers in the extended rom prior to any future hard resets. Additionally, you can include some programs you want installed immediately after a hard reset here if they cannot for some reason be included in the ROM. Extended ROM is the smallest partition on your device and is about 7.50MBs I think... it might be a little bigger or smaller, but I think that's about what it is...
Part 3, Main Memory: The only portion of your phone's memory that they let you modify by default. This is where you put your documents, programs that won't fit in the ROM, etc. This memory is precious as you've discovered you don't have much of it. I think it's only got about 32 MBs total... I find that this portion of my memory erodes over time as many programs don't totally install... thus forcing you to do a hard reset eventually just to get rid of all the crap.
Part 4... sorta (obviously not part of internal memory)... Storage Cards: Your best friend when you need more disk space will always be your storage card. Most people here have had bad luck with Cards over 2GBs as the Apache doesn't really support them. So you're probably best off just getting a one or two 2GB MiniSD cards for games, programs, music, or video. I found that you "can" use 4GB MiniSD cards but its NOT easy and does require some work. Effectively you have to trick the PPC into thinking your Memory card is in fact TWO 2GB cards instead of one big 4GB card. Don't ask me why... bad things happen if you try to do it any other way. I can fit about 30 games (30-35 MBs), all my TOMTOM maps for north america (850MBs), several audiobooks (1-2GBs), a small playlist of about 100 songs (450MBs), and a couple feature length movies (500-700MBs)...
That's not bad for one card.
There's a bit of learning curve with all of this stuff. Just take it slow. The Kitchen is actually very easy to use. Don't freak out when you see the HUGE read me file. That's only required reading if you wish to MODIFY the kitchen. If you're happy with it as is... then you can load it up, choose a few of the programs you want to include or exclude... and go.
Eventually, you will want to learn how to modify the kitchen. You'll include those iphone skins in the rom. That way your phone can use them without eating up your precious Main Memory.