I wanted to know if there was a size limit to the data files an android app can use or a size limit depending on the SD card (or internal memory) filesystem ?
Cheers
The file size limit is determined by the filesystem. FAT32, for instance, cannot handle files larger than 4GB. Unfortunately, it is fairly likely that your microSD card is formatted in FAT32.
For Android 2.2 and older, the internal file system is YAFFS. The author, Charles Manning, states in this mailing that the maximum file size is 512 MB. It has been announced that Android 2.3 will use ext4.
It might be possible to format your SD card to this format as well, but I haven't tried it. Bear in mind that you won't be able to read the contents under Windows or OS X.
See also the answers in this topic.