In my case it was with a LaCie Pocket Drive 10GB.
This is a FireWire400/USB drive.
I always used it on FireWire as then it draws the power it needs from FireWire.
When I tried to Erase from Disk Utility (OS X 10.7.5) on the disk using the FireWire400 interface I got this error.
After trying again a few times (and cursing), I Googled this and noticed some disks have firmware issues.
Thinking that maybe the firmware handles FireWire and USB differently, I though I might as well try the USB interface.
Found the original box with the power brick (needed when on USB) and also a USB cable in the box.
Tried it and it worked!
So I did not have to resort to trying to find revised firmware, and loading it onto the drive,
which may have required trying to interact with the drive via Windows under Parallels.
Not sure that would have worked!
Anyway, allowing for my time it probably would have been cheaper to buy a 16GB memory stick.