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There are programs out there that let you shrink DVD's to around 128mb so you could even have a few 128mb flash cards and watch DVD's on the go (it's even widescreen if you turn it on its side).
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Wonder what codec that is. The thing must have a fairly decent CPU...well..for a phone at least. I really don't see the need for having everything in one like a swiss army knife...actually thats a good example..how ofeten do you use a swiss army knife vs actually getting a knife/scissors/whatever. Convergance doesn't mean better IMHO.