how do I know apps are being saved to my SD card instead of to my phone

At this time "Installing" apps onto the SD card is not an option.

Someone speak up if it is available in 2.2 because my phone is still on 2.1

You can however use an app like "Linda Manager" to "back up" apps to the SD card. Therefore you can have many apps ready to install as you want to use them.

For example: on my HTC Eris I have about 88 apps installed to the phone's internal memory which still leaves room for phone to run smoothly. But I have close to 200 apps backed up to the SD card (88 of which happen to also be the ones installed).That way I can install them quickly if I want to use one of the "backed up" apps.

Many apps like games make the most sense to "back up" seeing how they can be rather big or are not need everyday.

I believe justJay is correct about the ability coming in Android 2.2. However, even with Android 2.2, from what I have heard, the option to save to SD card is a developer decision, and not necessarily just an end-user choice.