Yes getting a new HDD for your PS3 will definitely be more cost effective.
(Largest drive size PS3 supports is 9.5mm, 2.5 SATA laptop HDD or SSD drives)
Here's a recommendation -
http://www.amazon.com/dp/B003SX0ORA/?tag=neogaf0e-20
Also since many people don't realize this, Sony shows you how you can do this in the official documentation that comes with a PS3 console, there is even instructions on the official website.
https://support.us.playstation.com/app/answers/detail/a_id/362/~/upgrade-the-hard-disk-drive-(hdd)
You will need three things. An external USB storage to back up your PS3 stuff, A Phillips screw driver, and copy of the latest PS3 firmware from Sony's website.
It's a simple as four steps.
http://manuals.playstation.net/document/en/ps3/current/settings/backuputility.html
1) Using the PS3 back up utility in the PS3 System Menu, back up all of your saves, dlc, psn games to an external USB storage that is big enough to hold it.
http://us.playstation.com/support/systemupdates/ps3/index.htm
2) Copy latest firmware to the USB storage in a folder directory named as follows (PS3\UPDATE\PS3UPDAT.PUP)
3) Remove HDD from it's compartment, there is a door on the system that pops off and the HDD held in this compartment like a cartridge secured by a single blue screw and sliding lock. Once the drive is removed you'll see the enclosure, carefully remove the 4 screws securing it, swap it with the new HDD, reapply the 4 screws, put drive back into storage compartment, re-lock the drive, put back on blue screw.
4) Turn on PS3. If it asks for firmware, plug in USB storage and install it, If not, go to back up utility in the PS3 menu and restore back your DLC, saves, PSN games, that is stored on the USB storage. After this you should be up and running with a bigger HDD
After this you should be ready for any PS3 game install, DLC, digital game, etc.
Happy Racing!