You should, of course, shrink the partition first if you have grown it to fill your SD card, otherwise you will almost certainly end up with corruption.
If it's possible to increase the pixel density of the screen I think it would be ideal since I think most phone apps probably would do better with 150% the current PPI density. Also, digitizer accuracy and responsiveness are pretty important and maybe having a faster form of memory than SD-Card.
Of course it depends on what kind of device you are trying to build and what cost-range too. I think there's interest in a more expensive higher quality device provided value is exchanged for the benefits.
