Not a size limit as far as I'm aware. The biggest 2.5" SATA drives which are readily available on the net are 320GB although there are bigger ones due out very soon.
You can actually mod the drive bay in the PS3 to connect a 3.5" drive via eSata so you could go up to 1TB if you wanted to, but this does mean having an external HDD caddie sitting next to the PS3 which also requires it's own power supply.
Thanks for the reply Joebob.... now where are the drives on OcUK's web site...



Only reason I got the 320 is because I've only just got my PS3 and I didn't want to do it again for a while. Plus, I was quite shocked as to how fast the original 40Gb drive filled up too in such a short amount of time.