I have 8Gb card. I did not have to format it - it is sold already formatted. If you need to format it anyway, put it into the reader and format it as FAT32.
Another question - why do you need to bluetooth the music over? I copied what I wanted on the storage card using SDHC card reader
http://www.ledshoppe.com/Product/com/CA2029.htm (4x-8x times faster than via USB cable)