speed. internal drives will out perform external firewire 400 drives. also, i've had many more firewire drives suffer from corrupt data than internal ones but that might be just bad luck.
I would suggest (for your situation) a firewire drive. You can create your own, just buy a firewire bay and put an IDE hard disk in it. You can see the one I made for my system sitting on top of my G5 in this pic: http://darklotus.dubr.com/users/fahrvergnuugen/G5_2.jpg
it cost me about 60 bucks for the 120GB hard drive and then 40 bucks for the drive bay... so far its worked great.
Dual G5 2.0Ghz / 2.5GB Ram / 620 GB HD / 23" CD