Why You Should Use the exFAT File System on Your Flash DriveSaturday, August 11th, 2012
exFAT is a file system, similar to FAT32 or NTFS, developed by Microsoft and released to the mainstream in Windows Vista SP1. It’s primarily intended for Flash drives, as opposed to magnetic hard drives, and has the added advantage that Apple Macintosh computers with OS X 10.6.5 or later support it by default (which is not the case for NTFS). Based on the linked article, you should probably use NTFS for standard hard drives and exFAT for Flash-based devices, and just completely forget about ever using FAT32. exFAT will work with Windows XP if you install update KB955704.
Thanks to Josh for this link.