This works for me with a 4 GB SDHC Card in Windows XP:
I use a separate USB SDHC adapter--I don't know if you can formate "through the camera" directly...
Open a DOS wind (START, RUN, CMD <enter>)
To format with FAT16 (substitute Drive "Z:" with your drive letter)
format Z: /fs:fat
then
bootable Z: The "bootable.exe" program is available from several download areas... The "bootable" program must be in the directory where your CMD window is running, or in your "PATH")
then
copy the bin file to SDHC Card root.
Write protect card to boot into CHDK (little switch on side of SDHC card).
Note, FAT 16 only supports native 2GB cards. 4GB cards may have problems--but works fine for me.
As I understand, if you want to use CHDK with auto-boot (a must for the A720IS), the file system must be FAT 16 and when you formate an 8 GB SDHC card for FAT 16, you will get a slightly non-standard FAT 16 file system with a maximum of 4 GB of addressable space.
You will not be able to address the full 8GB card using this process... You will only be able to address 4 GBytes.
So far, works fine on my A720is and Windows XP...
-Bill