Droid Does... only have 256MB of storage for apps
The Droid reportedly only packs a 512MB ROM (that's the built-in memory), of which only half is allocated for apps. There are some iPhone games that couldn't even fit in that teeny-weeny storage space! But at least it's expandable, right? Um, nope. Google doesn't support installing apps to the SD cards that Motorola relies on, so developers are pretty limited in terms of file sizes for their Android 2.0 software.
The Droid may have a solid CPU and GPU for gaming, but games that take full advantage of that hardware are likely to need 100 megabytes or more of storage space. That's going to make things pretty tough until Android 2.0 comes to a device with a lot more pre-installed flash memory.
[via Daring Fireball]
UPDATE: While it's true that the Droid only has 256MB for apps, commenters have pointed out that various resources for the apps (graphics, etc.) CAN be stored on the device's SD cards. It looks like the situation isn't as bad as the numbers seem to indicate at first.