Hmm... im not convinced by "7.1" surround.
a)theres no subwoofer
b) theres two ear cups, and regardless of how many drivers it has inside the actual casing itself i guess you would get a pretty weird stereo sound out of them, as they are not naturally distant like normal surround speakers.
c) most MP3s/AAC and so on would be recorded in stereo anyway, so would be effectively doubled up twice on each side.
anyway, aside from my opinion, ill try to answer your question.
that is the android OS, so i'm guessing it has its own internal memory, and can be used for apps and so on.