I just got a new 2 GB media card and installed it. When I check Status, it looks like there is additional memory. But when I go to Options--->Advanced Options--->Media Card, I noticed at the bottom of the screen that it says:
"A media card is not presently inserted in the device"
You may see that if you have the BB plugged into the PC at the time.
You can always try reinserting the Media Card, enable it as Mass Storage, and read through our FAQ site for hints and tips on using it. Main Page - BlackBerryFAQ