Well--I'll just throw this out there. You've been getting along with less than 500GB for a while so maybe 500GB would be enough space? If so, you could set up 2 500's in a Raid 0 configuration. That can give you faster load times which are are easy to get used to...
As far as partitioning: I used to slice my drives like what you're talking about doing but do it less now. I'm currently running two 250GB Seagates, dualboot XP and Vista (Vista for work related stuff only at this point). I have the Vista drive with 2 partitions and keep files I want backed up on that (Drive E). Most of my games are on the C Drive with XP and they all run well--and I wouldn't expect them to run better on a seperate partition.
As far as Defragging goes--It doesn't take long to do it on my system. I run defrag at least once a month and go have a sandwich. Once I even went outside
. If your system is solid and reasonably fast, the partitions just sound like extra work to me. But you DO want to put OS's in their own partitions!!!
And I'd stay away from FAT32 unless you're running Win9X. NTFS is more efficient. I don't have any experience putting virtual memory in its own partition so I'll leave that for someone else who has done it to answer that one.
In the long run though--it sounds like you know enough to get yourself into trouble without my help
. Getting 7200's will be a serious step up from the 5400 you've been running.