Joel Ivory Johnson has a code sample that handles streaming directly to IsolatedStorage.
Source: J2i.Net
Last week I posted a sample voice recorder on CodeProject. The application would buffer the entire recording in memory before writing it to a file. A rather astute reader asked me what would happen if the user let the recording go long enough to fill up memory. The answer to that question is the application would crash due to an exception being trhown when it fails to allocate more memory and all of the recordingwould be lost.