I am doing this write up per request of Christim. This is not my app all credit goes to Koush and his team.
Intro: What is ROM Manager?
Rom Manager is an application available in the market. This application makes it possbile to flash ROMs and create backups all from your phone without ever having to mount it to your computer. Now all devs have the option of adding their ROMs to RM and making them available for download and install straight from your phone. Also adding in the possibility of OTA updates.
How do I use ROM Manager? <Suggest to do this with WIFI as it speeds things up>
1. Simply root your droid. Through the conventional method or download DMupdater from www.droidmod.org. If you don't know what root is explore the forums and study what you are doing first because I nor anyone else is responsible for you voiding your warranty or any damage you do to your phone.
2. Go to the Market and install ROM manager. The very first option on the screen after you install will be "Flash Clockwork Recovery". *EDIT* you will be prompted for SU access just check "remember" and allow. Select phone model and wait for progress bar to complete and it should say "sucessfully flashed clockwork recovery". You are now ready to enjoy all the splendors of ROM manager.
3. Before you do anything you need to create a backup. This is your safety net if something doesn't go right. Go under the section of the application that says "Backup and Restore" and select "Backup Current ROM". You will be prompted to name your backup. I suggest with naming it either the name of your current ROM version or date you did the backup(ex: Cyanogen5053 or UltimateDroid811). Your phone will now reboot into recovery to complete the backup.
4. This may be your first experience with a Recovery platform, so I will go over the navigation. You to navigate through recovery your hardware keyboard needs to be open. You use the directional pad to navigate through options. You use the gold button in the center of the D-pad to select options. Finally you use the power button to go back to the previous menu. Also before I proceed if you ever are getting stuck in Boot Loops or any other reason you need to get into recovery you simply power up your phone with the hardware keyboard open and power up while holding down the "X" button, or you can enter through ROM manager.
5. After your backup is complete you will need to select the option to reboot system now. Now you are ready to start flashing ROMs. Download the ROM you would like to try from using the option "Download Rom" in ROM manager. I suggest doing your research before hand to see which ROM you might be interested in. Check out their options and see which one might appeal to you. It will give you options to select of what packages to install. Alway install Google Apps on Cyan ROMs so you don't lose the Market.
6. If your are coming from stock or any other 2.0.1 based ROM you need to make sure you select the option to wipe data/cache. This removes all apps, call logs, and sms. If this bothers you I would suggest purchasing a backup program, but I will not go over each one's features because it's off topic but the top recommended are Titanium Backup, My Backup Pro, or for just apps ASTRO works just fine.
7. Your phone will now reboot and install the ROM. Do not attempt this process with less than 40% on your battery. Now you just have to set back up your phone and you can enjoy your new ROM. Don't bother backing up contacts because they are tied to your Google account and that is the best way to recover them.
Additional Features: What else can it do?
You can also hit the check for Updates button in ROM manager and it will see if the Developer of your ROM has posted a newer version. You should not have to do a wipe data/cache if you are just updating, but if you ever get stuck in boot loops I suggest giving doing a wipe before you try any other trouble shooting.
You can theme certain ROMs if it is available. Example Nextheme for Cyanogen based ROMs. Or Ultimate Droid Customizer for Black Droid's ROMs.
A new feature that is available is to flash alternate recovery image. If you do not know what Sprecovery is, or have a reason to use it I would not recommend it because Clockwork recovery is superior in my opinion.
Any additional comments should be placed here, and any questions or trouble shooting should also be placed here.
To the board moderators: If we create a Sub Forum for Koush please relocate this thread there.
UPDATE EDIT: ROM manager now has an option for Verizon stock ROM. I have personally not tested this because I do not plan on going back to stock. I personally love my current options to much to go back to stock waiting on an update, so any questions on this option will have to be directed elsewhere.