Thank you, Jecel,
Thank you for reminding me of it. We don't know how much is the hard limit given to us (or its existence), but this would be a good option if we *need* to squeeze our stuff.
Note that the file system used on the internal Flash chip (jff2 or something like that) already does compression, so giving it a compressed file doesn't necessarily mean that fewer bytes will be used on the chip. It is best to actually test it and see what difference it makes.
Ah, now I remember the similar discussion on the iPAQ's internal memory.
I haven't looked at Dan's implementation, but there may be some trade off between seek&read time and size, such as creating chunks rather than one flatly compressed file that may need to seek (just an idea...)
-- Yoshiki