Yes, SDRAM they're cheap, maybe $5 for 16Mx8x4banks. Micron MT46V series. Instead of using Xilinx's core, Opencores has a few SDRAM Cores. Skimming them over, one guy made one for his system that used a T80 Core, VGA Core, UART etc.
The XC3S50 Spartan 3 in 100-pin QFP is the smallest Xilinx FPGA with BlockRAM. Some banks of the FPGA will have to be dedicated to the 2.5V I/O of the SDRAM, and then a bank dedicated to 3.3V to the 65816. The SDRAM I mentioned is available in 66-pin TSSOP. Alot of the pins are NC for the x8bit version, so maybe the XC3S50 will work... will have to try and fit the one of the SDRAM ccontroller cores in there first.
Maybe time to start a new thread about high volume memory. I have no idea how to control any sort of DRAM, but I would like to learn. I do know it is capacitor based and requires row and column refresh timings, I've known this since the C-64 came out, but it was intimidating back then. Also, I would like to see what some of the SDRAM controllers look like when implemented... Although I can't get into another project right now, I think I can start an interesting thread where we all could contribute to and learn from?
Interesting, over 20yrs ago the guys designing the C-64 decided to use DRAM. Andre has articles of CAS/RAS timing, and I believe he actually had the chance to talk to the original C-64 designer, Bill Herd IIRC?