Bought USB 3.0 32GB Thumb Drive For MBP Retina - Format?

I bought a PNY 32gb Flash Drive, USB 3.0.  Wow, so much faster than my other 2.0 thumbs.
Like my other thumb drives it pops right in, the MBP immediately recognizes it, and your transferring files no problem, even very large 10 gig plus folders.  And there is no problem transferring files with co-workers who have PC's by other manufacturers.
The PNY drive is formatted MS-DOS (FAT).  One lone problem I have is that when I drag over my Microsoft User Data folder, I get a message that the 10.2 GB Folder with 515,000 items, "can't be copied because it is too large for the volume's format."  How do I resolve this as this folder contains my 10,000 plus e-mails in Entourage?
Can I solve this by reformatting my flash thumb drive to "Mac OS Extended Journaled" within the disc utility in Lion; and if so, will I still be able to swap files with this drive with my co-workers using Dell and Toshiba computers?
THANKS!

I'm backing up emmarty on this one. It works.
I'm working with a Lexar 32Gb USB stick right now - one of many brands, sizes and formats. Initially I forgot that FAT was difference than ExFat formatting; I just fell into the "Uh, Windows is FAT; let's use that"-history. Didn't work, wanted to be formatted by Windows 7 (which didn't know what to do with a 32Gb device - suggested 200Mb).
Looking at it from a UX perspective, the odds are the UI isn't different enough for the user to note they're formatting it wrong. I'm calling user-error on this one.
Just because it's on the Internet doesn't mean it's right. Ask Pierre Salinger.

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