I've installed quite a few apps and my storage info is:
Internal SD card:
Total: 6716 MB
Available: 6713 MB
Internal phone storage:
Available: 879 MB
(No total given)
Seeing as the apps I've installed total more than 3 MB (about 20 MB), I'm guessing that apps are installed to internal storage, but don't know what happens if that gets full (but ~900 MB seems to be quite a lot for applications only).