I ran into this problem the other day. You can go to:
http://maemo.org/community/wiki/ExtendedRootFilesystem/

But this process is difficult so i opted to clone OS2008HE to my 2GB memory card and this gives pretty unlimited space to install programs. Go to the link and read the post there is an all in one installer that will do the whole process

http://www.internettablettalk.com/fo...ight=Clone+deb

Also there is a DEB files to do the whole process that the first link provided is supposed to do, but I have no tried it.

http://hczim.de/software/mmc-unionfs.html


Hope this helps