Having so much internal memory will only go so far when it comes to fighting the lag, but I will say that it is amazing how bloated Stock 2.1 seems. Haven't used it for more than a handful of hours the first day I got my Hero, so I don't know how much actual free internal space you have out of the box, but I remember it seeming like not a whole lot (the bloatware doesn't really help either). Right now I have about 20 or 21 apps installed, and have 125mb of internal memory left. I am rooted, and running a CM6 build: after a clean install and installing necessary Google apps like Market, Gmail, etc (and promptly deleting the ones I have no use for), I think I had about 140-150mb free internally, maybe more, don't really remember since I've been running this setup for a week or two now.
If you want to stay unrooted and stock for whatever reasons, Launcherpro is seriously the way to go to eliminate most, if probably not all, lag. Set the App Drawer opening speed all the way up, Screen Previews opening speed all the way, Homescreens Minimum Scrolling speed all the way... really makes a difference, and if you also download Spare Parts like a poster above said, it will be even faster/smoother. Of course, you will lose Sense widgets or whatever, but there are replacements for most, if not all, of them. Small price to pay to make the phone about 1,000,000x more usable, especially if you don't want to root/flash ROMs/overclock/etc.