I upgraded my 60 gig launch model with a 160 gig 7200 drive. I didn't lose any of my downloads. It is very easy to backup/restore the ps3. I bought a sata enclosure and use the original 60 gig as extra storage. It took me 30 mins. to backup, 5 minutes to swap hardrives, and 25 mins. to restore.
Thanks for the input, Jeff.