As best I can tell this isn't unique to me... but if anyone /can/ use cdparanoia or grip on a USB CD drive with kernel 327 or later, please let us know.
The underlying cause, as I've reported before, seems to be that the sg driver currently does not work with USB storage devices. It worked in 305, it doesn't in 327 onward (I don't have any kernels from in between those available). The symptom is that sg doesn't even see the devices and doesn't report them when you load it.
Pardon the cross-posting, but I've reported this in bugzilla and on the devel list before and there hasn't been any ack of this problem, which I think it pretty critical... I know arjanv thinks sg should die, but while some of its uses may be marginal, CD ripping is not... I mean, is there anyone who /doesn't/ rip their audio CDs these days? It would be pretty bad if FC2 couldn't rip on USB drives.
:j