Currently VLC installs on internal memory and cannot be moved to SD card. This takes up 20+ MBs of internal memory. The vast majority of new Android handsets being sold around here in my country have low internal memory.
For eg. the most recommended budget Android is HTC Explorer which has only 90 MB of internal memory. A Sony Ericsson Live With Walkman which I have bought recently has about 320 MB of which a major chunk has been eaten up by software updates and I am perennially running low on memory even after moving all possible applications to SD card.
Please consider allowing VLC installation into SD card.