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You can't upgrade the 40 GB the way you're thinking. You can increase the HDD space, but the 40GB PS3 doesn't have the Backwards Compatibility that comes standard with the 80GB, and as far as I know you can't just upgrade it to do so.
As far as playing Homebrew games, I think you need to put Linux on and do some more stuff from there ask some other members they know more than I do about it.
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PSN ID :: Triple6ix
Games :: Rainbow Six Vegas, Uncharted, GTA4, LittleBigPlanet, Resistance 2
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