Rocketman: That link is misleading as it discusses FAT12/FAT16 but not FAT32. In fact the default FAT32 cluster size is 16KB for a 1GB SD card and 32KB for anything larger (up to the 8GB SDHC currently available).

Since FAT32 also has a limit of (approximately) 4 billion clusters, this places a restriction on minimum cluster size that affects larger cards. You can have 512 byte clusters only on volumes up to 2GB. The limit becomes 1KB on a 4GB volume, 2KB on an 8GB volume, and so on.

lite: You can't "run out of FAT entries" (allocated by the formatter) before the volume is physically full. I currently use two 8GB cards in my N800, one with default 32KB clusters containing mostly MP3s, the other with 2KB clusters dedicated to Maemo Mapper files - literally millions of them. I'm sorry that I can't offer an explanation for your write errors, or more generally, for why my installation works and yours doesn't.