Okay, first of all it's not the CycloDS Extreme, it's called the CycloDS Evolution.
Saying "Extreme" is sort of taboo here because it reminds us all of the DS-Extreme, the worst flash card that ever existed.
On topic: You don't need 500 MB to keep it running smoothly. I'd say 50-100 MB is enough for all your saves (512KB each) and real-time saves (which take up a whopping 5MB each), and to keep your CycloDS running smoothly. If you experience any lag however, most probably when you enter the in-game menu, then that means it's time to clean out your MicroSD.