JS,
The 16gig card is predominatly set up for your camera pictures, video and music. Trust me, the onboard memory will not even begin to be enough for these files with any kind of normal use. You have bear in mind that as just a phone, the card is barely needed. To fully exploit the phone, many of us are finding that 16 is barely enough. For some folks, 32 will not be enough.
And yes, you can put music, video, pictures and programs on the external card. And I am guessing that having the high capcity card is going to open a lot of possibilities for programmers, especially those who develop apps that require massive amounts of data storage, like mapping programs, or perhaps games.
Craig