Is it possible your thumbdrive has two parititons on it?
Some of them have a small partition for their own software - say 200 meg out of 16 gig or something. Is it possible that's what you're seeing?
When you view it in Disk Utility (Mac) or Disk Management (Windows) what do you see?
Windows will give you an artificial limitation of 127Gig for a FAT32 partititon but the file system itself supports up to around 2TB from memory. Just don't use explorer to format it (use either your Mac or a third party tool for Windows)