I'm new to the N800 myself, and haven't really tried doing anything low-level with it yet. But Flash memory is usually rated for around 1 million write cycles. When you're just using it as a disk device, you tend to read a lot more than you write. (With a digital camera, how long would it take you to capture 1 million photos? [And it would actually be a less than 1 million, since some areas like the filesystem metadata would get written more often.])

When you expand swap to the card, you have the potential to use up those write cycles a LOT faster. You only need to expand swap really if you are using apps that result in exceeding the 128MB of internal RAM that the N800 has. With a 'stock' install, I doubt that will be an issue. If you start loading lots of third-party apps on it, though, then you might be more in need of additional swap space.

Someone needs to make an SD-format RAM card, rather than flash. Then you could have an internal card that does not suffer from limited write cycles to be your external swap. That it isn't persistent should not matter for a swap device. Of course, you'd never want to store real files on it, though mounting a tmpfs on it wouldn't be a bad idea (assuming your tmpfs isn't built on top of swap already).