instructables web site says you have to reformat your harddrive in order for it to work
"No, you can't do that unfortunately. When you insert a new drive internally, the PS3 will format the drive. That drive is then linked to that PS3. It does not allow you to use a different hard drive without formatting it first. This is an anti-piracy measure that stops you from download games to a drive, then sticking it in your machine."
"Step 1: A few things, first...
There are a few things to think about before jumping right in.
What about the stuff on my PS3? Can I keep it?
The PS3 has a back up function that will save everything on it...as long as you've got a storage device big enough to hold it all. An external hard drive makes things pretty easy. Before you upgrade, just plug in your hard drive via USB, select System Settings>Backup Utility>Back Up and follow the onscreen directions.
If, however, you're like me and don't have an external hard drive, you have to take a different approach. Just use a memory card or usb flash drive and save your game saves. Everything else can be easily re-acquired. Anything you download from the Playstation Store is infinitely available to re-download. Installed game data can be re-installed. Game patches and updates can be re-downloaded. Time consuming, but a viable option.
What kind of hard drive do I need?
Pretty much any 2.5" SATA hard drive will do. I picked up a 250gb drive for around $70. Hard drives have come down in price significantly, so a huge drive is pretty affordable. Its worth noting, all that you need is a drive capable of 5400rpm and 1.5gb/s. You could spend more money on a drive that's capable of 7200rpm and 3.0gb/s, but the PS3 will only utilize it at the aforementioned speeds, so its pretty useless.
Can this brick my PS3?!
Nope. All of the PS3's system data is stored away safe and sound, far away from your shaky, nervous hands. Of course, common sense is a prerequisite here. If you use the correct tools, take your time, and follow directions, it'll be fine. If you use a butter knife for a screwdriver and rush through it....yeah, you'll probably screw something up. "
Source: instructables web site post by cornflake_81