Because FAT32 and Linux get along better. NTFS read support in Linux is experimental at best and writing is almost totally unsupported. Within Linux you can read and write files to and from FAT32 partitions without breaking a sweat.
"Experimental" in Linux doesn't mean the same as experimental in Windows. Just mean that it might write 1 bit wrong in 10,000,000,000. So it's not worth the performance loss if you're going to use WinXP on an 80 gig drive.
And yes, writing works too. Go check out Knoppix
I put the thing in the drive, booted, and it saw my WinXP partition just peachily.