What do you mean by not recognizing it?
The best file system is debatable.
I'd recommend NTFS for (supposed) speed benefits over FAT32 and newer features, plus you can use files more than 4Gb in size with it, which you can't with FAT32.
Also, I heard Windows XP won't format volumes over a certain size with FAT32, hopefully someone can clarify whether this is right or not.
However, NTFS is subject to the "RAW phenomenon". I don't understand this, but I've seen it mentioned, hopefully someone can explain that too.