Not sure, but I am pretty sure people have managed to go up to around 500GB in the past.
As for making it hotter... It depends on the drive. I'm guessing the PS3 comes with a 5400RPM drive, so if you put in a 7200RPM drive it will probably generate more heat. However, it's not as simple as all that. You also have to look at the electrical specs for the different drives. If the 7200RPM drive has a lower voltage and/or amperage rating, meaning it draws less power, it will likely run cooler as a result. Less energy used, means less energy is wasted in the form of heat.
So, if the electrical specs were identical, and we were comparing 5400RPM vs 7200RPM drives, the 7200RPM drive would run a bit hotter, but probably by so little it's inconsequential. Now, if the 7200RPM drive is pulling less power, that will mitigate some of the extra heat generated by running the motor at an extra 1800RPMs. Just how much it mitigates depends on just how much the difference is between the two. You'll have to break out trusty old Ohm's Law and do the math to figure out things exactly.