For reasons of security(you can f.e.encrypt files and folders) and better use of the harddisks (better defragmentation and more possibilities in chkdsk) use NTFS,for reasons of accessibility FAT32 .
I recently changed to ntfs (w2k-winxp pro) , but I still have a fat32 drive put my Norton ghost images on and other stuff .
Otherwise I have to put those Norton ghost images on 2 times 5 cdrs ,and that\'s not feasable , as I change my Images every two weeks . Norton Ghost doesn\'t see usb drives neither ,so you cannot put an image on it .