Can PS3 install game on flash drives like Xbox 360?

if ps3 can use external FAT32 usb hard drives, why can't it use usb flash drives as hard drives? how can ps3 distinguish if something is external usb HD or external usb flash drive? do i follow the same steps for the usb flash drive as the external usb hard drive? I am running out of space on ps3 hd and i don't want to dedicate a huge hd to ps3. i think 16 gb flash drives are enough space. it worked for my xbox 360. only difference is that xbox 360 doesn't install games. what would happen if i delete my game data utility file for bad company 2 on ps3? I don't remember installing bad company 2. i guess those are the game's updates? does that mean i will have to reinstall all the updates again if i delete the game data utility?