For the people that's always used m3's in the past, I believe the simply follows the same rules. FAT32 is fine but runs into speed issues, and FAT16 in largest cluster size possible helps with performance (hence the 64k cluster size). Your worries for the included card reader holds water, I've reviewed mine and to tell you the truth (as I'm very aware of manufacturin in China), this piece must cost no more than 30-50 cents to make. It is very shoddy in quality. And easily if a solder point is wrong, the thing can die quickly and overheat (as another person has reported already). You'd be better off getting a quality card reader and use the SD card adapter included with your microSD card. Check here to help with your formating:
http://www.m3wiki.com/index.php/Media_Card
"How to I format my card with a higher cluster size?
Go to: Start -> Run -> diskmgmt.msc
Select your SD card and right-click "Format"
* Volume Label: Whatever you like
* File System: FAT
* Allocation unit size: 64k
FAT32 Always select the highest cluster size your card can handle (1GB=8192; 2GB=16k; 4GB=32k).
FAT16 Always select the highest cluster size your card can handle (1GB=64k; 2GB=64k; 4GB=64k).
If a specific cluster size breaks Fast Open or Real Time Save in GBA mode, experiment with different cluster sizes to find one that works for you. "
If you want to do it by command line, bring u the prompt and hit format /? and see all the options in formatting to set a 64k cluster size.