I had two 8 GB USB flash drives that suddenly started showing up as only one GB (983 MB).  A little research showed that through creating various live CD images for antivirus, freeNAS, Ubuntu, part image, etc., the drives had been partitioned and Windows was only recognizing the first partition.  Windows disk manager won't change the partitions on the flash drive, either. [more]

A solution is to use command-line diskpart.

Diskpart

- LIST DISK

- SELECT DISK X (Make sure you get the right disk!)

- DETAIL DISK

- CLEAN

- CREATE PARTITION PRIMARY

- EXIT

Then format the drive.