What file system to use when formatting?
 

Does it matter what file system you use when formating a disk in linux? I know there is a host of options that are available in the system, but which ones are best to use?

For Linux I use ext4 though I've seen people recommend ext3 instead.
For usb flash drives, fat32 is usually recommended for cross-platform compatibility, the same can be said for sd/mmx cards.
The other options are generally intended for specific needs and can mostly be ignored. :)

A lot of installs default to ext4 these days but ext3 is fine too. I have a laptop with Arch Linux and is formatted ext2, as it's quick but not as forgiving as ext3/4 due to lack of journalling. For backup partitions and flash drives then its bog standard FAT32.

Im using XFS for my 7.5tb LVM disk but I need to defrag it every so often.

It sometimes gets up to 70% fragmentation.

Ive never had to defrag my xsf4 system disk(it may be usage though).

Ive also read that Rieserfs is very good for disks that use many small files.

Yes but I don't think there would be too many takers for for that file system now.

I haven't looked into file systems in awhile.

Has it not been keeping up with ext? Last I heard they had Rieserfs2.

Yes, it does matter. It comes down to what you plan to do with the partition. For example, If you plan to use a large partition as storage for large files XFS is more efficient then ext4. If you want share files with Windows NTFS would be the way to go. If you want to share with Windows and MacOS X FAT32 is your only option.
But usually, if you have no special purpose for that partition, you will be fine with ext4, it is stable and faster than its predecessors.

I will use ext2 for thumb drives. I don't run windows, and ext2 will have fewer writes without a journal.

For /boot, I usually use ext2. For / and /home and the rest, I use ext4.
If you aren't running a large database or video streaming server, ext4 should be fine.

Support for reiserfs basically died when Hans Reiser went to jail a few years ago.
http://en.wikipedia.org/wiki/Hans_Reiser