New Internal/External HD

Hey, first post so please bear with my ignorance. I bought my wife a PB about a year ago and we have been pretty happy with it, but the 80GB is really small for doing iMovie, and she loves this, and the new camera, Canon 20D, eats up space as well. I talked with apple and they will not upgrade the drive. Questions are:
1) Is it possible to do this myself with the PB, or is their some inherent hardware limitation?
2) If possible, I still have 18 months on the warrantly so should I wait to do it?
3) If I wait, I have a 250GB Buffalo LAN drive on the home network, should I convert this to the Apple only or get a firewire drive?
4) If firewire or USB2, what is the difference in transfer speeds?
5) Can I use Final Cut Express HD, which we just got, from an external drive without much issue?

I have a bunch of questions, but I've been happy enough with the PB to talk my Mom into getting one, she just bought it, and I'm converting over the home network to an Apple server sometime soon. My only disappointment was that I would like to use ROKU players around the house and they don't support the AAC (sp?) iTunes coding scheme which screws me up a bit.

Also, I can hear the cooling fan in the top left side of the PB now, like it is going out of balance. Is this a real issue, or should I let it go? I have the warranty, will they fix it?

Firewire drive over the USB version due to sustained transfer rates (this has been debated to the end of the earth but most test results show the firewire to have the better throughput rate overall). For iMovie I wouldn't bother with a lan drive as it'll take a while to move the large files across your network. Forget upgrading the internal drives. Laptop drives are way more expensive than 3.5" drives and many are quite a bit louder than the stock drive so the sound may be an issue as well.

your pb should support firewire 800, i would get a lacie disk with a firewire 800 port, it is what i have, good speeds, i use it for video editing all the time.

Thanks so much for the responses, what do you use for backups. DVD's or do you have a second drive imaging the first firewire?

it depends on what i am backing up, I use DVDs to back up pictures and music but sometimes, i use the firewire drive to do an entire disk image from time to time.