Difference between RAM and internal storage chips in HTC Sensation
When talking about internal memory in mobile phones they usually mean Flash memory. This is the memory which holds your system software (operating system and such) and the applications. This memory is non-volatile, which means that data is retained even when power is switched off. That's what you want, otherwise your phone would become worthless if the battery is drained.  

RAM is volatile memory, which means that the content is gone when the power is switched off. This is used by the OS and the applications to hold their temporary content, which becomes irrelevant if the device is switched off and/or which easily can be reconstructed.