From HTC UK’s facebook page:
Our engineering teams have been working hard for the past few months to find a way to bring Gingerbread to the HTC Desire without compromising the HTC Sense experience you’ve come to expect from our phones. However, we’re sorry to announce that we’ve been forced to accept there isn’t enough memory to allow us both to bring Gingerbread and keep the HTC Sense experience on the HTC Desire. We’re sincerely sorry for the disappointment that this news may bring to some of you.
Update: After the backlash, it looks like HTC are working hard to get 2.3 onto the Desire: https://www.facebook.com/#!/htcuk/posts/226147870748035, they’ll instead remove some bloaty apps to make way. Hopefully Flash!
If they removed Footprints, Facebook, Flash and Peep and allowed people to download and install themselves, they could pick and chose and have the apps on SD instead of phone!