Google today announced that they're raising the app limit from 50 MB to a whooping 4 GB. This means that soon we'll be able to see very high-end apps (think full Photoshop) and games (think full console games) on Android devices, whether that's phones, tablets or Google TV's. We might not see developers using this much immediately, but it's definitely a way to look forward, and push developers to go crazy with the app content.
In the past, one of the reasons why quality games took so long to come to Android, was because manufacturers were still using incredibly low amounts of internal storage on their high-end phones with 2 GB of microSD storage. But since most apps until Android 2.2 only installed on the internal storage, then the storage was effectively 150 MB or so for apps.
Later came the App2SD in Froyo, but many apps didn"t support it for a while. We started getting phones with higher internal storage, at least at the high-end of the spectrum. Virtually all low-end phones today still have 150 MB of internal storage. Some would say that people buying those phones wouldn't know how to use it anyway. But I disagree. That small amount of storage is virtually useless, and it can be filled up within a very small amount of time, even by regular people who use the Market (now Play Store).
It's also harder for regular people to deal with it than for us techies, because they don't know what App2SD is or how to use it. This is why I think Google should at least recommend manufacturers to use at least 512 MB of internal storage, even for their most low-end devices. But that's only for this year. Maybe next year, that amount needs to be raised to 1 GB. They just need to keep track of how big apps become over time. I'm hoping they will tell this to manufacturers, but even if they don't maybe manufacturers will realize on their own that phones can't have this little storage anymore.