I'll go with recommendations re space shortage as this is just an experiment, but if I like the distro I have a 20GB drive I can throw at it plus another 128MB RAM from a dead iBook, plus I'll load it onto my new laptop.
Oh, is there any particular file system I have to use for each partition, ext2, ext3 etc, or is that automatic?
I suggest you use one of the journalling file systems (ext3 or reiserfs). I nearly always go with reiserfs but not for any particular reason. I don't understand the technical details of why one might be better than another for a particular system. reiserfs has always been fine for me. Journalling file systems do a much better job of preventing file system damage, or recovering if damage has occurred, than non-journalling file systems. VL offers a new file system now (xfs?), but I know nothing about it and it has an experimental "feel" to me, so I haven't tried it out.
I never make a separate /home partition. As long as you can copy the contents of /home to other media if you're going to reinstall and don't want to lose settings and data in /home, I don't see any advantages to having /home on its own partition.