The main difference between 2.5 & 3.5 inch USB Caddies is that the 3.5 inch ones come with their own power supply so they are not draining power through the USB ports. The 2.5 inch once come with leads that will connect to 2 USB ports for their power or some will connect to a USB & PS2 port to get the necessary power. Not a great idea when you need to switch them between computers unplugging a PS2 keyboard and needing to reboot.
Really the main difference is price per GIG of storage with the 3.5 winning hands down in the price stakes as the drives are plain and simple cheaper for the same size the caddies themselves cost about the same price so that isn't an issue.
Most of the dead USB drives that I've seen fall into 2 categories those 3.5 inch ones that have been drooped once too often and the 2.5 inch ones that have just been unplugged without shutting down and safely removing the device. Most people forget to shut them down before unplugging them.
The 2.5" also fit nicely into Hand bags and get full of junk in the socket quite often with women particularly they'll find the lead easily and then upend their handbag onto the floor for the 2,5" caddy with the drive in it don't laugh I've seen this happen more times that I care to remember.
While I do use both I find that with Desktops the 3.5" generally works better as you can fit a much bigger HDD into the enclosure for a smaller price and if the people have NB's then the 2.5" drives are just packed into the NB bag along with the NB hardly a secure option but at least they are easy to find. :D
The last one I supplied I could sell them a 2.5 40 GIG drive and for about the same price I could sell them a 3.5" 200 GIG drive it really depends on how much data you need to store and how happy you are with extra pieces like power packs. Both tend to be as reliable as the other in the same hands.
Col