What exactly is lost by flashing the FS?

[japan6]

basically if you flash your FS, it will return it to its factory defaults. So how the phone came brand new, thats what your phone will be like after you flash your FS. You'll loose everything that you've put on. All the settings, everything. Your going to need to resetup your mms and internet settings if you use that stuff (which can be done automatically from on the SE website), along with the given date and time. Also, every file that you put on it (sounds, movies, music, pictures, even themes) will get errased. I'm assuming to that your debranding it, so if you are, keep in mind all the branded stuff will be lost two, so if you really like that theme/picture/sound that came on your branded phone, you'll loose it unless you back it up

[Nazgulled]

Also, every file that you put on it (sounds, movies, music, pictures, even themes) will get errased.

But that will only happen if I have those files in the phone's internal memory right? if I have them on the memory card, they will still remain there, correct?

[niteowl]

But that will only happen if I have those files in the phone's internal memory right? if I have them on the memory card, they will still remain there, correct?

Yes sure. Flashing FS will only affect the phone's internal memory, not the memory stick.
You can always pull the memory stick off and flash the phone's FS, after all (obviously it is not a necessary precaution). ;)