I have replaced my HDD from the original 60 gb to a 500 gb. The process was pretty painless. I got a 2.5″ 5400 rpm SATA Seagate laptop drive for a really good price from newegg.com. Google info on switching drives since there are some great video and articles on it out there. I only worried about saving my game saves when i did the change and compied them all onto a portible hard drive. Once the new drive was in, i just redownloaded all my DLC.
WARNING!!!! The screws holding the hard drive into the casing in the PS3 are really easy to strip so be careful. I stripped 3 of mine and had to use a Dremel to cut flathead screw slots in them to take them out.
Lastly, i went for the 5400 instead of the 7200 because i had seen some reviews of overheating with the 7200's. I have had this upgrade in for 6 months now with not a single problem and my hard drive is actually running quieter than before.