Internal PS3 HDD Replacement

There are a couple of things to bear in mind when upgrading the PS3 hard disk. To be explicit: physical size; storage capacity; type.

Physical size: The disk has to be a 2.5in laptop drive, and despite possible expectation, these are manufactured in slightly different sizes. Currently they come in 9mm and 12mm depths. The 12mm disk is too large to physically fit in the PS3 so you'll want to source a 9mm disk.

Storage capacity: It's not explicitly stated by Sony what the maximum is; however I don't think there has been a 9mm hard disk manufactured yet that has hit the limit. Last I heard 1TB disks were just about squeezing in the PS3.

Type: It has to be a SATA disk.

Digital Foundry put together a really good, in-depth comparison of the performance you can get out of different hard drive types (in particular, SSD vs traditional):

PS3 Hard Drive Upgrade Guide

In short, the SSD isn't as big of an improvement as you might expect, with some exceptions.

CNET put together a piece on how to do it. Just get a 2.5" SATA drive and format it to FAT32 and you're good to go.