Gentoo doesn't ask you what to install anything on. you install Gentoo on the partition of your choice. You can, in practice, install Gentoo on any partition type supported by the installation kernel and run it from any partition type supported by your custom kernel.
A minor correction to what Mark said: vfat is fully supported by Linux (read, write, edit, create, etc. are all supported and implemented). You can't install onto a vfat partition though because the vfat/FAT32 filesystem does not have the appropriate permissions capabilities. If you have no filesystem preference, a good suggestion is to use Ext3 or ReiserFS. I prefer Ext3, for what it's worth...
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