I've also got the same problem. In my case, I've tried a lot of solutions without any real effect. Let me explain my case:
I've tried to format this USB device with the normal method that Windos XP/Vista have, also I've tried with the famous HP USB Disk Storage Format Tool, also I've tried a low format level format with the HDD Low Level Format Tool but nothing, I've always got the same problem: The USB Device doesn't has fomat... I've tried with FAT, FAT32, NTFS and NOTHING!!!
I've also tryed with MS-DOS and I got a message that says that the drive it's too large for a FAT or FAT32 format, and with the NTFS I've got a message that says that the format can't be completed!
Also the file system of the memory it's RAW!
So I really don't know what to do and... Well this USB it's not mine, but i's owner has drop it to the garbage XDD and I want to fix it so I'll have this mini HD free XDDDD hahaha
Please help me :(