Use a program called fat32format. click here
There's a GUI version too. It's a tiny program (48KB) and does exactly what you're after,
The program lets you specify the cluster size if you want, so you can choose the trade-off between FAT size and wasted space.
If you're going to use if for the PS3, then I assume that you'll be putting things like music and movies on it, in which case a large cluster size is fine.