Nintendo has licensed AM3 to produce a micro SD adapter for downloadable content (512MB), though it's for comics, books, magazines, anime, movies, and television programs rather than games. And only in Japan.
The DS firmware can't be upgraded without shorting the pins in the back, so that claim is bogus (and would be unnecessary anyway).
The FFVII claim is also made up, though I wouldn't be surprised to see it make it to DS eventually. With current compression technology, FFVII wouldn't have to be that large in any case.