Possibly. You need the Camera Connection Kit.
USB drives can only be read by the iPad, not written to. Not all USB storage devices will be usable.
No. You cannot connect an external drive to the iPad. There are some WiFi hard drives that store media - music, movies, photos - that you can use with an iPad over WiFi - but you can't connect one to the device with a USB cable.
The Seagate GoFlex Satellite drive is one of those WiFi drives.
This new product got reviewed the other day. Good idea, but I'm not sure it's ready for prime time yet.
The way it works is it creates mini wifi network, you plug a memory stick, or I guess a drive into it, and move stuff back and forth.
There are some wireless external hard drives that can be used with the iPad.
The Kingston Wi-Drive, which costs $50 for the 16 Gigabyte, and then $30 more for every 16 gigs more. It works by you turning it on and then accessing the files on it from an app that you download on your iDevice. You can access music, movies, and other stuff. No connections or anything, it works like a WiFi connection, you connect to it from the setting on the iPad under wireless networks.
Then there is the Seagate GoFlex, which some would recommend over the Wi-Drive. But this one costs $199 and had 500 Gigabytes of storage. It works the sameway as the Kingston: no wires, runs over its wireless connection. You can actually fit up to 300 HD movies on it.
Expand your iPad's storage capacity with HyperDrive
On the road with a camera, an iPad, and a Hyperdrive