Actually, you can run a 2TB 3.5" drive fine. Run SATA cables from the internal connector to the external drive (preferably in an enclosure) and you're ready to go.
For replacements, just about any 2.5" laptop SATA drive (regardless of RPM) will work. If you have the money and you don't keep a bunch of things on your HD, you might want to get a SSD instead for the faster loading drives.
Sony sells systems by HD sizes because people generally like bigger numbers. There's not a huge cost difference between a 160gb and 320gb drive (their current models), but they can sell the 320gb system for $100 more because people will buy it. Everything else on those two systems are identical minus the packaging.
As Papastu said, HD size has nothing to do with PS2 compatibility. Just pop in a new drive and you'll be fine.