If you are trying to decide rather to go with NTFS or FAT, perhaps this article may help you make your decision
FAT16 - This is an older file system from the MS-DOS days. The biggest advantage of FAT16 is that it is compatible across a wide variety of operating systems, including Windows 95/98/Me, OS/2, Linux, and some versions of UNIX. The biggest problem of FAT16 is that it has a fixed maximum number of clusters per partition, so as hard disks get bigger and bigger, the size of each cluster has to get larger. In a 2GB partition, each cluster is 32 kilobytes, meaning that even the smallest file on the partition will take up 32 KB of space. FAT16 also doesn\\'t support compression, encryption, or advanced security using access control lists.
FAT32 - This file system is really an extension of FAT16 and was introduced in Windows 95 Service Pack 2. It greatly improves the overall disk utilization when compared to a FAT16 file system. However, FAT32 shares all of the other limitations of FAT16, and adds an important additional limitation, many operating systems that can recognize FAT16 will not work with FAT32, most notably Windows NT, but also Linux and UNIX as well. Now this isn't a problem if you're running FAT32 on a Windows XP computer and sharing your drive out to other computers on your network.
NTFS - The NTFS file system, introduced with first version of Windows NT, is a completely different file system from FAT. It provides for greatly increased security, file-by-file compression, quotas, and even encryption. It is the default file system for new installations of Windows XP. During an upgrade from a previous OS, you will be asked if you would like to convert to NTFS. If you are unsure, you can convert at any time to NTFS, but going back to FAT or FAT32 isn't as easy, as it will require a reformat and repartition. The NTFS file system is generally not compatible with other operating systems installed on the same computer, nor is it available when you've booted a computer from a floppy disk. You can however create a small FAT partition on your main hard disk as a means of recovery, but since XP has such great recovery abilities, it's really not necessary these days.
When should I choose FAT? - If you are running more than one Operating System on a computer, atleast some of your volumes are going to need to be FAT. Any programs or data that need to be accessed by more than one operating system on that computer should be stored on a FAT16 or possibly FAT32 volume. Problem is there is no security for files on FAT or FAT32, meaning anyone can alter or delete your files. So, sensitive data should not be stored on FAT.