Yes, you can use an External Hard Drive for storing recordings.
The HR 20 series I know for sure, there has been some discreferency about using one with the HR21's series.
Some say you cannot use them with the HR21's, I don't have one (HR21), so I cannot tell you.
Many of us use the Seagate EHD's with pretty very good success, there are alot of other makes that will work as well.
Regardless, make sure you get one that has a ESATA connection.
Jimbo