yes, of course it works with 40 gb, works with any version of ps3.
As far as specs of a hard drive go, you're always better off going with the bigger cache than the higher spin speed, and seek time can cancel both of those out (but is usually an aggregate of the two). Here you go, a 10k rpm 2.5" SATA with 16mb of cache and 3.9ms seek time.
http://www.tigerdirect.com/applicati...697&CatId=2676
Seagate Savvio 10K.2 73GB 2.5" Mobile Hard Drive - SAS, 10K, 16MB, OEM