The lights are on
Update: Now that we have the PS4 in-hand, we can verify that game saves can be moved to a USB drive. System data cannot be stored on external drives.
We know that games like Killzone: Shadow Fall are weighing in at 40GB. Sony has addressed how users can add bigger hard drives in a new PlayStation 4 FAQ.
The new console does not support external storage at all. This means that thumb drives and USB connected hard drives won’t help alleviate your limited space woes. You can, however, upgrade the internal hard drive.
The PlayStation 4 supports internal hard drives of 160GB or more, provided they are no thicker than 9.5mm. By comparison, Microsoft’s Xbox One supports external storage options, but will not have a user-serviceable hard drive.
[Source: PlayStation Blog]
Our TakeNeither of the consoles supports both solutions, which means that the storage debate is a matter of preference. I replaced the internal hard drive on my PlayStation 3, and it was easy. I expect it to be equally painless on the PlayStation 4. I look forward to seeing someone benchmark a solid state drive in the system, as that could be a strong option for players willing to spend a lot of money for a slight performance boost.