Well since you only have the 40GB model I would reccommend getting a bigger HDD, you can get one for pretty cheap and they ar really easy to put in, especially if you dont have any gamesaves on it.
As for games here is a list I reccommend
inFamous
Uncharted 1 & 2
Resistance 1 & 2
Ratchet & Clank Future (All 3 titles)
LittleBigPlanet
Killzone 2
God of War III
God of War Collection
Valkyria Chronicles
Flower