The card isn’t “too big,” you just might not be able to fill it to capacity. However, many people use higher bitrates anyway, and you can easily get up to 2.5x the normal file size by ripping at 320kbps. Those who prefer to do this tend to grab for the highest capacities available.
What brand expansion card do you have? I have a SanDisk 8gb and it only shows up as 4 when plugged in to my computer, but aside from that the player itself sees all 8gb of it. I’m going to be furious if you need a different brand of card to work in a SanDisk mp3 player!
After doing the firmware update, it still had no effect, but after formatting the card in the Sansa, after the firmware update, when I plugged it back into my PC it showed up as 7.8gb, w00t! I am much happier now.