Definitely easiest way to do it is CWM. Go to advanced partition SD card. The first part is the space for apps, 1024 would be 1 GB. The second part is swap, just starting out set it to 0.
This will erase everything on your SD card.
If you install Cyanogenmod 7, its pretty much automatic, meaning you will have massive room for apps.
If you use Koumakernel, it will work with any ROM except stock. Koumakernel 1.2 is also pretty much automatic, the others you have to choose mount options