Issue 1151: many of you know it, whether the issue number is familiar to you or not. The issue is that users have to install apps on their phone's internal memory, instead of having the ability to store the apps on the microSD card inside the Android phone. Thanks to AndroidandMe, we now have reason to believe that Google will provide us with this ability in the next release of Android.
Early Android devices like the G1 don't have much internal memory and that greatly limits the number of apps you can install on your phone. However, the comment above, depending on his definiton of "soon," may mean we see this ability in Froyo.
Phandroid had this to say about the topic:
A quick scan also reveals this is no longer an “open” issue — having been closed just today — meaning it will most likely be ready to launch in the upcoming Froyo release of Android. We are expecting hear a whole lot of info regarding Android 2.2 (Froyo) at the upcoming Google I/O conference on May 19th, which will almost definitely layout the plans for the newest version of Android.
Image from Engadget
Source: Google Code Android