I even went out to buy a 2gig SD card so I made sure that I was able to use that to install my roms and it doesn't even recognize it? WHAT SD CARD CAN I USE?!?!?
If you're running a stock Sharp ROM, you can't use an SD card larger than 1GB. I'm pretty sure that the SD driver for the Sharp ROM can be upgraded to support larger cards.
I don't believe I've had any problems with the different SD cards I've tried in the Z, but I understand that there are some cards that it doesn't like. I've used Patriot, Transcend, and probably another brand or two of SD card that my wife is now in possession of.
This page has some info on compatibility.
Personally, I have always used CF for flashing or for making a NAND backup, so I have little experience with using SD for that. However, I'm doubtful that you'd be able to use a 2GB SD card for flashing because of the size. When I got my Z I found a couple of cheap 512MB CF cards and a multi-format card reader, which was really helpful. For one thing, the card reader supports a higher transfer rate than the Z's USB port. If you shop around, I'm sure you could find a deal. The smaller capacity cards don't have much demand since the larger cards have come down in price.