iTunes and iPhoto on external hard drive?

Hi,
I have been looking around the forums, but haven't heard a definitive answer on this.

I know I can put my iTunes library and iPhoto library on an external hard drive. But what are the down sides to doing this? Are there any? Can I still sync my iPhone with iTunes and iPhoto on an external? Does it cause any extra steps, other than just plugging the drive in?

ANy information or personal experiences with this would be helpful.

Thanks!