From WesternDigital's Knowledge Base:

Determining drive capacity can be confusing at times because of the different measurement standards that are often used. When dealing with Windows and Mac based systems, you will commonly see both decimal measurements and binary measurements of a drive's capacity. In either case, a drive's capacity is measured by using the total number of bytes available on the drive. As long as the drive displays the correct number of bytes (approximate), you are getting the drive's full capacity.

Decimal vs. Binary:
For simplicity and consistency, hard drive manufacturers define a megabyte as 1,000,000 bytes and a gigabyte as 1,000,000,000 bytes. This is a decimal (base 10) measurement and is the industry standard. However, certain system BIOSs, FDISK and Windows define a megabyte as 1,048,576 bytes and a gigabyte as 1,073,741,824 bytes. Mac systems also use these values. These are binary (base 2) measurements.

To Determine Decimal Capacity:
A decimal capacity is determined by dividing the total number of bytes, by the number of bytes per gigabyte (1,000,000,000 using base 10).

To Determine Binary Capacity:
A binary capacity is determined by dividing the total number of bytes, by the number of bytes per gigabyte (1,073,741,824 using base 2).

This is why different utilities will report different capacities for the same drive. The number of bytes is the same, but a different number of bytes is used to make a megabyte and a gigabyte. This is similar to the difference between 0 degrees Celsius and 32 degrees Fahrenheit. It is the same temperature, but will be reported differently depending on the scale you are using.

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Various Drive Sizes and their Binary and Decimal Capacities

Drive Size in GB	Approximate Total Bytes	Decimal Capacity (bytes/1,000,000,000)	Approximate Binary Capacity (bytes/1,073,724,841)
10 GB	10,000,000,000	10 GB	9.31 GB
20 GB	20,000,000,000	20 GB	18.63 GB
30 GB	30,000,000,000	30 GB	27.94 GB
40 GB	40,000,000,000	40 GB	37.25 GB
60 GB	60,000,000,000	60 GB	55.88 GB
80 GB	80,000,000,000	80 GB	74.51 GB
100 GB	100,000,000,000	100 GB	93.13 GB
120 GB	120,000,000,000	120 GB	111.76 GB
160 GB	160,000,000,000	160 GB	149.01 GB
180 GB	180,000,000,000	180 GB	167.64 GB
200 GB	200,000,000,000	200 GB	186.26 GB
250 GB	250,000,000,000	250 GB	232.83 GB

For Mac only:
For full details about this issue in Mac systems, visit Apple Support. The two articles from Apple listed below, explain drive translation and why the drives appear smaller:

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