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If I've just got it sitting around in the on position, I leave it on the cradle. All batteries have a limited number of charge/discharge cycles before they have to be replaced, so I try not to discharge mine unless it is necessary.
If you need extra battery life, the expansion packs that allow one or two PC Cards also have an extended battery in them. If you don't need two PC Cards, the expansion pack that only holds one is much easier to hold and is more pleasing to the eye.