Externally-mounted hard drives and other IDE peripherals such as CD/DVD drives, typically come with one of two...
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interfaces for their host PC: USB 2.0 and FireWire. Both of them get the job done, but they're different enough that the differences are worth discussing in detail.
USB 2.0 is the newer of the two interfaces, and can theoretically support transfer speeds of up to 480 megabits per second. FireWire (or IEEE 1394, as it's also known) supports up to 400 megabits per second, and has been around since the late 1990s. In real-world testing, though, FireWire consistently outperforms USB 2.0 when used for large-capacity devices such as hard drives— FireWire is just faster.
One big reason for this is because USB is optimized for multiple devices; more of the bandwidth is used up for message passing rather than actual information. FireWire -- especially in its new FireWire 800 incarnation—is optimized for speed, since most people don't plug in more than one or two FireWire devices at a time. Also, when copying between FireWire devices, the host controller doesn't need to manage the communication; the devices can talk to each other directly for greater speed.
The one big advantage of USB 2.0 is that it's the more broadly-supported and available interface of the two, and is fully backwards-compatible with USB 1.1. Many machines (especially servers) do not ship with a FireWire controller and need to have one added on separately. Fortunately, this isn't very difficult -- a good FireWire controller generally doesn't cost more than $30 or so. It's even possible to get combination USB 2.0 / FireWire controllers for around $50, so that an older machine can reap the benefits of both busses.
To sum up: If you want convenience and backwards compatibility, use USB 2.0. For speed, use FireWire.
Serdar Yegulalp is editor of The Windows Power Users Newsletter. Check it out for the latest advice and musings on the world of Windows network administrators -- and please share your thoughts as well!