Note: if you have not done so, please read the introduction to Upgrading a PS3 Hard Drive before performing these steps.
Upgrading the PlayStation 3 hard drive is a simple process. In the Sony PS3 manual Sony actually tells you how to do it, but towards the end they throw in a bunch of protective legal mumbo jumbo saying you may void your warranty. My best guess, if your console needs service, re-install the original factory hard drive before sending it in. Upgrading the hard drive may void your warranty, so do so at your own risk. Here is what you will need to perform the upgrade.
In the picture below you will see a screwdriver, a notebook SATA 160GB hard drive (you can use any size, but use a 5400RPM drive), and an external USB hard drive, you'll need the hard drive if you wish to save content from the old PS3 hard drive.
The first step is making sure you have a nice, clean, safe area to work and that you have the above materials and tools. If you have all of this, then you are ready to begin upgrading your PS3 hard drive! Continue to the next step...