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External is good if you want to use it on multiple computers or just as a backup. Neither one is better – is just your preference. Seagate and Western Digital are good brands.
Internals will cost less. Plus with an external, you might have an issue with speed through your usb. (There’s two different kinds of usb, 1.1 and 2.0. The 2.0 is very fast, but the 1.1 is very slow. You can switch out your 1.1 ports for 2.0’s for about $20, plus a small hardware swap.)
If you expect to take that hard drive to another computer, use an external.
If you aren’t, use an internal. They’re cheaper than external.
If you are just doing small back-ups, try using DVD’s instead.
Maxtor External Hard disk
external:
Acomdata 500GB External Hard Drive With One Touch Back-Up (HD500UHE5-72)