It's a popular misconception, iqs. The problem used to be that old BIOSs used not to be able to see large drives/partitions.
FAT32 only supports file sizes up to 4GB, so if you're planning on storing large files, karmgord, you're much better off with NTFS rather than FAT32. ntfs is more secure and uses space better in any case.
Not really, iqs, XP still wont format FAT32 partitions further than 32GB, you can create more <32GB partitions using XP and format those though, but that's not really useful. To format FAT32 disks and partitions larger than 32GB use a Win 9x floppy bootdisk or a third-party application from within XP, something like mkdosfs click here