What are the possible upgrades one can perform on a Raspberry Pi (Model B) in terms of SD card capacity, etc., using a USB hub to increase the number of available USB ports? I understand the memory is soldered on to the board, so it can not be upgraded per se.
Upgrading the RAM is, as you have said, not possible. You also cannot upgrade the GPU or the Broadcomm CPU.
If you want to upgrade the SD card, you simply buy a new SD card and re-install the operating system. You can even backup an existing card, burn that backup image to your new card and then expand the space to fill the card (using raspi-config). A list of known SD cards that work is on the Wiki at eLinux Maximum size currently reported to work is 64GB.
You can use a powered USB hub to expand the number of USB ports. A list of the hubs known to work are also on the Wiki at eLinux. A powered USB hub will allow you to add additional storage space via a USB pen drive or USB portable hard drive.
The memory is essentially impossible to upgrade, well unless of course you'd like to de solder the RAM from the SOC. The memory is part of the SOC so you cannot change the memory without changing the CPU and GPU (The whole SOC).
In terms of USB you can technically hook up 127 devices per USB port. Using the USB ports you could also add more storage to your Raspberry Pi.
Also the Raspberry Pi foundation are also working on a camera that can be plugged into the RPi. Into one of the header ports, not using the USB ports.
Also I suppose you could use the GPIO pins to add just about anything to the RPi.