No real downside other than the fact that apps don't move entirely to SD. All shared libraries must stay in the main storage as well as application parts tagged 'secure' from my understanding. I have my N1 rooted and use App2SD but still sit at about 32Meg free with everything possible moved. At 19 Meg (10%) the phone goes into 'low memory' warning so unless I keep caches cleared I'm always not too far away from being out of space. Gigabytes of internal storage would be a dream apps wise, and will probably be the tipping factor in when I let my N1 go even if I have to loose other things.
This is brilliant, thank you for the link. I think you just saved my N1 from an early retirement. I may wait until 2.3 comes down the pipe (soon? please Google?) then do it then. I would hate to see it mess up the OS upgrade. Thank you again.