Arduino as a mass storage device?

Is it possible to have an Arduino work as a mass storage device. For example: plug in the arduino and it shows up as a drive on your computer.

Has anybody done this? Is it possible? what other hardware would be required?

No, with the amount of memory free it's hardly mass is it. You need to make it into a USB device rather that the serial port it looks like. There is a USB shield from Spark Fun but you have to write the drivers yourself. Best bet is if you made one of these:- mind you that only looks like a HID not a mass storage.