I'll voice another 'amen' for DNG for a couple of reasons: 1) I hate having proprietary RAW formats that might "disappear" or simply not be supported by a future Adobe upgrade (I'm still P.O.'ed about them not supporting the Canon G10 RAW format for CS3!) and 2) because hard drive space to me is trivial when it comes to the costs involved with point #1 as well as how cheap it will be 6 months from now. For example, I bought a 500GB external HD in January for under $200 and that seems expensive now!
Nothing is absolutely future-proof, but the concept of an open-source RAW format is here to stay. Look at what Leica just introduced for their M9 as an example. It will be easier in the future to find an application that reads a standardized format than it will be a proprietary one. Anyone remember
JPEG2000? Yeah, no one else does either. Or how about the old Kodak Image CD formatting? I got burned on that one when digging out some old CD's from the early 90's. The point is, try to choose a format that's going to be around for a while. DNG is here to stay, why not adopt a standard?
As far as space on the SD card... 8GB Transcend SD cards are under $20 at Amazon! I mean, come on... as long as your camera supports SDHC, spend the money (equivalent to 3 rolls and film) and be done with it.