RAID discussion is what happens when this gets left in the regular hardware/software discussion forum. 0_0
Files will always be huge with Fraps because it does not compress files during recording. This takes tremendous load off of your CPU while you try to play your game. Lower the framerate that it caps and bring it down to half-res but that's about all you can do.
Recording to the same drive that your game is reading from can slow down the game.
As for external drives, I would highly recommend an E-SATA drive if you have the option. Recording to my 1 TB USB drive makes both the game and the footage extremely jumpy while the 750GB E-SATA runs very smoothly.
I was just telling myself the other day I need to find a 1 or 2 TB E-SATA since I just had a 577 GB Fraps folder with files dating back to PR 0.7

I feel so bad deleting all those memories...