1. Yes, Either 32 or 16 will work fine with the device.
2. If it doesn't have the latest software on it go to http://www.nokiausa.com/A4410958 and on the bottom you can download the Nokia Internet Tablet Software Update Wizard. The last firmware is called Diablo but I don't recommend updating to it ( You will have a lot of troubles downloading some of the applications on it ) I'll recommend you to stay with OS2008 for now.