Installing the Facebook App is unnecessary unless you're a heavy-user; (meaning that you are on Facebook everyday). The mobile website is more than enough to handle your Facebook needs if your just checking-in, sending messages and commenting on friends pics, posts, etc. Also consider using Facebook's Mobile Texting feature which allows you to update your Facebook Status, Add friends and a few other things through Texting to Facebook.
The Contacts can be stored on your SD Card, but they can ONLY be used while on the actual phone's memory.
What I do is press: Menu+m and open up the Manage Applications. Go to Downloaded and Force Stop everything I'm not using at the moment. Then I go over "All", "On SD card" and "Running" and do the same thing. When I'm done I go over my RAM at the bottom of the screen to compare my numbers. I like to have atleast 300MB Free showing in the "Running" section. My Replenish runs well after that. And every now and then, I'll go back in and make sure to go into the "All" section and clear out cache's on Browser, Email and Gmail since I use those alot. And sometimes Messaging.
Hope this helps.