Im looking for good quality 160-250 gig Harddrive to replace my 80 gig, ive looked around but im not sure if i am finding a good deal on the harddrives so i figured i might as well ask for some help as this site is full of very smart and tech savy people, so if i could get some help it be very appriciated, also i was wondering if external USB harddrives worked as well?

External do work, but not all. They have to be formatted in FAT32 rather than NTFS.

newegg.com

You're in the U.S., right? Hit craigslist and buy a used laptop SATA drive. You'll pay a lot less than retail. I got a 250gb 2.5 drive for my laptop for $25 off craigslist. Can't bet that price online!

As the post above states, you have to format the external hard drive to make it work with the PS3.
Here is an excellent article on how to do this: http://www.ridgecrop.demon.co.uk/index.htm?fat32format.htm
That article also contains the download link for a small utility that converts any external hard drive to fat32 format in mere seconds. be advised that converting to fat32 will mean all existing data in the hard drive will be lost!
Also you should try looking in ebay for SATA 2.5" laptop hard drives. I got a 120 gig one for $40.

can u put a game install on an external harddrive?

Would it be worth sticky-ing an Official PS3 harddrives handy hints and tips thread? There's been a few of these and often the advice sought and given is very similar.