Want to add a 1 TB drive to MacPro bay

I have a Mac Pro 2.66 Quad-Core bought on August 2007 so I believe it's the pre-2008 model. I have 2 occupied hard drive bays and am looking to fill an additional third bay at this time. My specs say to add:

750GB Serial ATA 3Gb/s; 7200 rpm; 16MB cache

My question is, can I actually add a larger drive? Say 1TB or larger with a larger cache, etc? I'm not using RAID or anything fancy. I'm just afraid if I buy 1TB and it only uses 750gb I'll have wasted money.

Many thanks.