I bought a 1TB Western Digital hard drive the other day, and it came preformatted with FAT32. Since I will only be using this on OS X machines, I wanted to reformat it with HFS instead, but had problems doing this with Disk Utility. Then I came across a thread suggesting to change the partition type to GUID, and everything worked fine. This can be done in Disk Utility as the screenshot below show.

Disk Utility showing volume scheme settings for WD drive

Partition scheme selection dialog for hard drive formatting