Flash has limited WRITE cycles, not READ. There is no reason at all not to use the N900 for storing PS3 games if you want, as long as you don't plan to change them often. Its certainly safe for testing.

The biggest problem is it might not be fast enough and you won't fit many PS3 games on 27GB, a few PS3 games are so big they would fill it just for that one game. Also a few games will ONLY work on the PS3 HDD due to their file sizes, so its best if you are going to use this long-term to just stick a large HDD in your PS3.

For the record, I use my N900 all the time to store MKV HD files to play on my Blu-ray player. It works perfectly.