You should definitely reduce the size of the PST file. This will improve performance, particularly when deleting and moving emails. Also, it will make the startup of outlook much faster post-crash. My suggestion is to use PST files as your top-level folder organization (just go to file-new-data file). For instance, I use a different pst file for each client engagement.

Also, if you do move to 2003. 2003 features a new (supposedly improved) type of pst file. 2003 works with the older files as well. You can't convert the old pst to the new -- you have to create a new file and then copy all of the contents over in outlook.