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Or you can just take any external USB HDD and plug it into the PS3.

That's the only thing keeping me from upgrading my 60GB to a 250GB or higher. Convenience of keeping my files other than game installs/saves on the internal drive would be the only real reason.

But an external drive allows you to easily and quickly share access all your media files with your laptop and desk top. A networked RAID array would be better obviously, but an external 500GB USB drive only costs about $100.