Does anyone know what subset of the iPhone's overall storage capacity is reserved for applications and application data? I am not talking about RAM, but rather disk space. I remember reading that only a portion of the iPhone's capacity was used for application data, while the remainder was used for music and media, however I cannot remember the amount. Thank you.
It depends on the model, of course - you have 8, 16 and 32 GB variations. My 16GB iPhone 3G would have around 14GB of free space, while my 32GB iPhone 3GS has around 28GB of free space. This free space is not limited to either applications, music, videos or podcasts - it is shared. As long as there is still free space available, you can install more applications or sync more media files. There is no partitioning of hard disk space by file type.
On the other hand, no single application may occupy more than 2GB of hard disk space.
iTunes assigns ~500mb of the device's flash to the OS partition and the rest is assigned to the user partition to store App Store application/data, music, videos, podcasts, email, photos etc. Upon sync iTunes will always ensure there is at least ~200mb free by removing music (usually)