Yes, I've put everything that's modifyable by the user onto the Extended Root Filesystem (i. e. memory card's newly created and sym-linked EXT3 partition). Movies and such I'd also store in the home directory which is on that partition. For file transfer, I installed SSH on the Nokia 770, so I can upload/download files with scp/sftp (Secure FTP - should work with Windows FTP clients, too).

KDE users should give the "fish" protocol a try - then you can browse the Nokia 770's filesystem just like your local harddisks.

If you don't want to be restricted to fixed partition sizes, the method of creating files which are mounted as loopback would be a useful alternative, then you could recreate a bigger one more easily - but of course, with only a single partition, it would get unmounted when the USB connection is established. Every method has its advantages and disadvantages...