I use my old 500gb drive to store all temporary stuff (windows temp folder, adobe scratch disks etc), and anything that needs thousands of small files to avoid unnecessarily fragmenting my C drive. However, it has started slowing down a lot recently (28000 hours of use so maybe it's dying, last year I moved the pagefile back to C as the read/write wait was slowing the entire computer), plus an upgrade would be nice, so I was thinking about getting a 4TB drive for temp files and games.
The only reasonably priced 7200rpm one I found is a Toshiba USB 3.0 external drive, so I'm wondering if USB 3 is sufficient for use such as what I mentioned above? The current 1TB external I have is a bit unreliable and slow, (good for storing media but not much else), so I don't want to risk it without checking first.
I have the drive, it's read/write speeds are over 50% higher than every other drive I have, and in its current new state, it can write lots of small files faster than my existing drives can. This is also using the PCI to USB 3 extension, not the slots built into the motherboard. I'll update this if anything changes, but the answer to the question is there definitely doesn't appear to be any loss in performance.
Update 2 (1 year later):
I'm using it with an SSD for the C drive now, and there have been no problems for at least as long as I've had Windows 10. I'm using it to store around 2.3TB of games, photos, and music, and it's still going fast. Maybe you might not get the same experience, but I'd say it's definitely worth it for saving money.
Update 3 (6 years later):
The initial question was posted because my experience of 5400rpm drives was terrible in 2015, so I was quite limited in what I felt I could buy. However, my recent purchase (WD40EZRZ) is equal if not better than my external drive, so that no longer seems to be the case.
The deal breaker of my external drive is it can be heard from other rooms - so much so that I was told it sounds like I'm playing shooter games. The housing isn't too well ventilated either, and it never drops below 55c when powered on. Perhaps shucking would be a solution to both these issues, but that's not what the question was about.
The actual operation of it is still fine however - the speed is the same, and it's been powered on for 34k hours with no bad sectors. I plan to continue using it for archival purposes, but it's unlikely I will ever buy another for the purposes outlined in the question.