Two things can be wrong (perhaps more, but these are the two things that happened to me). The drive is bad (disks may be bad but I hear the drives fail more often) or you have an extension conflict.
Are you running SpeedDoubler? If you are, you need to isolate conflicting extensions. I had the same problem on an older mac (pmac 9600). It turned out that there was a conflict of somesort between some of the new Quicktime 4.0 components and some legacy communication extensions installed by VersaTermPro. Together they would cause SpeedDoubler to lock up on large copies (>1GB transfers).
Try running your copy method with extensions off and see if it locks up. IF it does lock up with extensions off, call the vendor of the drives. You should have 30 days to return by law, after that they will want you to send it back to them (or IOmega Corp.) for repair. In my case the drive went back to APS and they fixed it within a week...no problems since. Since you can use the 1GB disks, it may not be your drive, but a conflict.
hope that helps