I have a used 3TB SATA hard drive kicking around that I am planning to use as a replacement in a Win 7 box. 

I don't need all this capacity so was I thinking if I format it to 1TB I would increase the reliability. My thinking behind this is based on the following thoughts:

* There would be more physical 'breathing space' between each sector/track.
* When bad sectors are found, there be a larger pool of unallocated sectors to bring into use.

**Are my assumptions true?**

If my assumptions are not true then what happens to all the unused space? 
Does the hard drive still format to the same physical dimensions; thus would my 1TB drive still be squeezing sectors onto the platter as if it were formatted to 3TB.

Many thanks!