External Memory
Before you even consider formatting the hard drive on your PS3, you should purchase an external memory device. This can be either an external hard drive formatted with the FAT32 file system, or a USB flash drive. With either device, you can backup all of the data stored on your PS3's hard drive.
Backup Utility
The PS3 Backup Utility allows you to transfer all of your data and settings stored on your PS3 to an external drive. This includes any videos, saved game data, downloaded games, music and photos stored on your PS3. If you've customized any settings, these changes will also be stored in your profile when you backup your drive.
Backing Up Your PS3
With your external drive plugged into the PS3, you can access the Backup Utility via the "System Settings" sub-menu in the "Settings" menu. When you select this option, you will be asked to select a device. Select the storage device you plugged in, then follow the onscreen prompts to copy your data to the USB storage device.
Formatting Your PS3's Hard Drive
With your files backed up, it is now safe to format your PS3's hard drive without fear of losing all of your data. Back out to the "System Settings" submenu, where you will find the "Format Utility." Select this option, then follow the onscreen prompts to complete the operation. When the operation is finished, all of your data will be gone and the PS3 system will restart.
Restoring Your Data
Once your system restarts an the hard drive has been reformatted, you can restore your data via the "Backup Utility" menu. Select the "Restore" option, then follow the prompts to copy the data from your USB storage device back to the PS3's hard drive.