Yeah, piracy is rampant all over the world.
Except your description of the process is a little off. The cartridges don't actually have memory on them, you insert microsd cards (which come in the sizes you said) and then you upload the program and roms from your PC in order to play it. Basically these cartridges and the software allow you to play NDS roms.
Interesting to note, at my university, almost everyone that carries around a DS uses these (I won't say the name of the "product", because I don't condone piracy).
Biggest issue with these things (and the fact that they aren't actually illegal here) is that people abuse the "grey" area of law. Basically, you are allowed to use these cartridges/mod chips to play "copy" games if you own an original, it's like for safe keeping, that's why piracy continues (at least for Australia). I must admit, it is mighty tempting because I carry around upwards of 10 cartridges when I take my DS out, to have it all in one cartridge would be awesome.
EDIT: Actually IronmanDX, I would say the DS is worse then the PSP. PSP gets more attention because there are less PSP's out there in the world then DS's, so even though the Pirate to Non-pirate ratio would be bigger on the PSP, I would say that more DS's are used for piracy then PSP's.
Also, the PSP is a portable media machine for pirates: music, games, movies can all be downloaded onto a PSP illegally, that'd probably another reason why the PSP piracy gets more attention. Having said that, the cartridge provides the exact same capabilities on the DS (I've seen it) with a few conversions of file types.
Simple fact is, DS is easier to pirate, you don't change the hardware or anything about your console, the cartridge is stand alone, where as the PSP you need to downgrade the firmware and in some cases open the PSP case.
