yeah, I must admit I have never been really sure if formating them Fat32 uses 'real Fat32'.
You can view the disk using a defragger and it shows data randomly spread across the disk as you would expect; however actually eyeballing the surface of the disk looks like it has been written from the center outwards like a cd. I guess the software/driver is doing some clever translation. But at the end of the day I have been using it for 2 years and never had any problems, it works just like any other removable system.
Anyways I am pleased XP is supporting the format, as before I had to buy the software to use the thing under w2k.