One big reason is that LCD, which will need a frame buffer if it's using the built-in TFT interface. 640x480x3 (assuming 24bpp) = ~1MB, before accounting for any double buffering or working memory for images or transformations. So that alone means you definitely want some extra RAM. Plus you probably want some stuff to display on it, and the 2MB of built-in flash isn't going to go very far when it comes to storing even compressed images on top of your application requirements.