1) They are saved onto the memory card, so it would be considered removable storage.
2) 512mb would be enough for you.
3) No need to downgrade for demos, much the opposite, you need the latest firmware for new demos. Although id suggest custom firmware (click my sig). Also if you wanted demos then maybe a 1 or 2 gig mem card would be better.
4) Web browser is free, online games free? I dont understand. All you pay for is your internet connection from your home or the costs to use wifi hotspots unless you found a free one.
5) If you have a wireless router in your house then you can use that.
Let us know what firmware it is and we can get you on custom firmware to unlock the psp's full potential.
Kev
