What does it mean in Windows Vista when you get the little popup saying "This USB device could perform faster"?
As tsilb said, try other USB ports on your computer to see if you can find one doing full USB2. You can double-check Device Manager to make sure your system has a USB2.0 Controller device.
Some systems have front ports that only operate in USB1 mode, while their rear ports operate as USB2.
Finally, USB extension cables and port adapters can cause connection problems which might limit the speed of a device; try plugging the device directly in, with a high-quality cable, and no extension cables or adapters.