I will be using my laptop exclusively for quite a while (im moving for school) and require massive amounts of storage space, ideally 400GB. I have never seen a 1000$ with this kind of space. So is the answer an external HD? I will be using it for multimedia files, hi-res. Are the transfer rates on external drives capable of handling this? is firewire the way to go? usb seems too slow for this task. Can someone recommend a external HD and tell me if a external drive is the answer to my problem?

So regualar size HD in the laptop, with DVDRW. But wont i burn out the DVD drive then? lol Thanks for the dvd idea though, i never really thought of it to be honnest. But thats alot of DVDs...

You should definitely use external drive.
Hitachi just shipped 1TB external USB drive, that should be enough for you I guess