I am using the latest Debian (squeeze) off internal flash with no problems. I tried switching to Debian on an 8GB Class 6 SDHC, but the resulting system was way too slow. I quickly jumped back to using the internal flash.Something seriously doesn't add up there. It was either a chinese fake from eBay or the like, or you formatted it in a completely different file system, one that doesn't perform well on solid state memory.
Me, I just picked up a 8gb class 4, I fully intend to make it my main drive, and leave the onboard drive alone. I wanted a class 6, but I'm cheap. No point getting such a cheap computer and spending almost that much again on the storage medium.