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Like SAiLO says, any FAT32 formatted external hard drive will work with the PS3.
I have an external 500GB USB drive which works well, and is good for making PS3 backups.
I also replaced the internal PS3 hard drive with a 250GB SATA drive.
I then put the 60GB drive which I removed from the PS3 into a small USB drive case (was about £5 on Ebay), for storing even more stuff!
If you need to format the external USB drive to FAT32, you need to use a PC.
I used a small free utility call SwissKnife V3 which formatted it perfectly for the PS3.
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