I currently have 4.38 gb free and 187 books. I only have books and abot 50 wallpapers on my main memory. Videos and music go on SD. As for the archive question, that's something I've been wondering myself. Edit: That's 12% by the way of main memory used. At that rate I can see fitting 1500-1800 books on here.
Ok, I don't know if this is related, but I did have a memory issue.
I had side loaded some videos (movies) on my NC. These must have gone onto the internal memory, not my SD card (I didn't know how to allocate where the movies went, when I did this originally-now I do) Anyway, I wanted to remove the movies to make more room & actually put new movies onto my SD card (which was the plan the entire time).
After removing the movies, I noticed no extra room. The way I deleted the movies, was that I hooked my NC to my Mac, I clicked on the movie file within my NC "video" folder & I drug that file to the trash on my Mac. Great, so far so good, the movie file is gone from the "video" folder on my NC, however, that did not create any extra internal memory.
What I was told by the great people here on the Nook Board, is that I will have to actually empty my trash file on my Mac, while the NC is still connected to the Mac via USB. I did that, and via la! It worked, I then got all my internal memory back. Since then, I've also experimented with the SD card, and that works the same way. So if you are removing things from the NC via USB cord to Mac/PC, make sure you empty your "trash" or "recycle" (what ever the PC uses as trash).
Hope this helps.