http://www.ez-pc.org/bd/2k/ntfs.asp?printable=yes
Using NTFS has many advantages over FAT and FAT32:
Reliability.
The main advantage of NTFS is reliability: The chance of losing data on an NTFS partition is much smaller than on a FAT partition.
Both FAT and NTFS use a table to store the location of files on a hard disk. This works as an index, when a specific file is needed, the table is referenced to see the physical location of the file on the disk. If a system crash occurs while writing a file, this table might be damaged, causing a loss of data.
NTFS has added insurance in the form of a transaction log. This log stores the undo and redo information for each file. If there is a failure while writing to the file, lost information can be retrieved through the transaction log. Retrieving data using the transaction log is completely automatic; no user input is required.
Security.
NTFS offers increased security by adding extra attributes to every file and folder in addition to the attributes used in FAT (hidden, read-only, system, and archive). With NTFS, you are able to grant or deny other users permission to access, modify, or delete specific files. In Windows XP Home Edition, these security features are limited to each user's My Documents folder. The other versions of Windows NT/2000/XP provide these options to all files on an NTFS partition (simple file sharing must be disabled in the folder options on Windows XP Professional edition to gain access to these features).
File and folder Encryption.
The Microsoft Encrypting File System (EFS) provides encryption for data in NTFS files stored on disk. EFS encryption is public key-based and runs as an integrated-system service, making it easy to manage, difficult to attack, and transparent to the file owner. If a user who attempts to access an encrypted NTFS file has the private key to that file, the file can be decrypted so that the user can open the file and work with it transparently as a normal document. A user without the private key is denied access.
This feature is available in all versions of Windows NT/2000/XP except Windows XP Home Edition.
Larger drive and file size support.
With NTFS, Windows NT/2000/XP can use partitions of 200 MB to 256 TB (1 TeraByte = 1024 GB). The maximum individual file size is 16 TB. In FAT32, these maximums are 2 TB and 4 GB respectively, which illustrates the improved flexibility with NTFS.
Less wasted space on drive.
Because of 64-bit addressing, cluster sizes are lower in NTFS. A hard disk has to be divided in clusters to be able to access a file. Each cluster needs a specific address.
NTFS has 264 (18,446,744,073,709,551,616) available addresses,
FAT32 only has 232 (4,294,967,296).
Because each cluster may only be used by one file, there can be a lot of lost space on a hard disk if a file does not completely fill each cluster it uses. Increasing the amount of available cluster addresses decreases the size of each cluster, minimising the amount of space lost.
File and folder compression.
Disk compression allows you to save space on your drive by selecting specific files, folders or entire drives to be compressed. Unlike using compressed filetypes such as .ZIP or .ARJ which have to be opened using an application before use, NTFS disk compression is completely transparent for the user because it is performed on file system level. An NTFS compressed file is opened directly with the application that requests it.
Disk compression was also available in MS-DOS 6 and later, but this only worked for entire drives and can prove to be an extremely lengthy process. The compression used on NTFS is more refined: compression can be enabled or disabled for every single file or folder and is accomplished in seconds rather than hours.
Caution should be used when compressing many files as this can cause performance loss, as each file needs to be decompressed while it is opened. On quick machines, performance loss is negligible; on slow systems that are near the minimum system requirements for Windows NT/2000/XP, the slowdown may be noticeable.