Should I be installing apps to the sd card or internal phone storage? ?

Saving downloaded apps and moving them to the SD will save room in internal memory for things that can't be moved or stored elsewhere.

Text, email and caches from other apps, will be saved to the internal memory, at least until you get a pop up message that you are running low on memory. So if an app can be moved to the SD card, without causing problems with how an app runs, I say go for it. This is what I do personally.

Also most apps that shouldn't be moved to external storage say something about that in their description on the Android Market or their help files.

As a general rule if you install apps to the SD Card it'll save your internal phone storage and won't affect how they run, If it's a desktop widget or a live wallpaper, keep it on the internal storage or it won't work