PS3 does not read NTFS. This could be a problem if you are converting a FAT32 drive with data on it that you want to keep or can’t move.

There is no unconversion (without a full reformat i.e. erase). Your alternative if you don’t want to reformat is to then run a media center through your windows PC. Which just complicates everything and there goes the simplicity of just simply plugging in an external drive to the PS3.
btw FAT32 does not read files larger than 4gb, so putting a full DVD on a FAT32 is not possible (hence the need to change it to NTFS).

That is all…