I have 3x4GB fake memory sticks, I have no issues with them at all. I've used them for everything from Magic Memory Sticks to CSO/ISO playback to homebrew, to timemachine on fat and slim.
If you ever run in to an issue, there is usually an easy fix and requires formatting of one kind or another. I can not speak for all fake sticks, just the ones I have.
Here's where I order from...
Memory Stick
..