I've now got my plug running Lenny and using a 30GB external 2.5" SSD as the boot/main filesystem. It's pretty great. I followed Martin's excellent instructions at http://www.cyrius.com/debian/kirkwood/sheevaplug/unpack.html
to get Lenny up and running. For the SSD I bought an OCZ SATA II 2.5" 30GB SSD and a Nextstar 2.5" case from Newegg for a total of about $150 and now have a completely solid state system.
That's a really good howto. Thanks for posting the link.
Why didn't you just toss $30 at the problem and put a 16 SD card in there and run off that ?