Benefits
Using a USB drive as a virtual memory card has several benefits. While the PS3 hard drive is sufficiently large enough to hold all of the average gamer's saved data, storing data on a USB drive in addition to on the console can protect data from being lost if the PS3 breaks. Also, saved data can be corrupted when the console loses power, so a USB drive backup can be used to restore a damaged save file.
Picking and Formating a USB Drive
The PS3 is designed to work with third-party drives, so any USB drive should work. However, there are instances in which the PS3 will not read a specific USB drive, but these problems are usually isolated to the individual drive.
The drive should be formatted on a computer in the file format "FAT32." Using FAT32 is beneficial for cross-platform use because it can be read by Windows, Mac OS, and the PS3. The PS3 will only read flash drives formatted in FAT32.
Transferring Data to and from the USB Drive
To transfer PS3 game saves to the USB drive, go to the "Game" tab on the XMB, select the "Saved Data Utility," select the game's folder, highlight the game save you wish to transfer, press the triangle button, select "copy," and then select the USB drive from the list.
To transfer PS/PS2 saves, go to the "Game" tab on the XMB, select the "Memory Card Utility," select the virtual memory card that has the save file you wish to transfer in, highlight the saved data, press the triangle button, select "copy," and then select the USB drive from the list.
To transfer save files off the USB drive, go to the "Game" tab on the XMB, select either the "Saved Data Utility" or "Memory Card Utility" depending on the save file type, select the "USB Drive" from the list, select the save file you wish to transfer, press the triangle button, and select "copy." A PS3 save file will go straight to the hard drive, while a PS/PS2 save file will need to be placed in a virtual memory card.
Things To Watch For
Some PS3 save files will not transfer, but the system backup will back up the files.
Don't remove the USB drive while the PS3 is on because it has a small chance of breaking the drive.
Some games have "master" or "settings" files that may need to be copied, too.