I've just had the dilema of buying a 500gb drive for the PS3 to stream media and then realising that I can only format the drive in 32GB partitions!
So I thought I 'd write a bit of info to tell you how to get the full drive formatted in FAT32 as I'm sure others will come across the same issue as me.
1) Delete any NTFS partitions on the drive so the disk is now with unallocated space
2) Create new partition on the drive
3) Select Primary Partition and set the maximum partition size
4) Choose a drive letter for the drive
5) Select "Do not Format this partition" and click Finish
Download the freeware tool fat32format
Once downloaded, extract the file and run:
fat32format [drive letter]
You will now have a full sized FAT32 formatted drive :-)