I'm no expert on this, but let me put this out there.
If I could completely reconfigure the partitions in Windows 7 install process (like in XP install process where you get to delete all partitions and create new ones), I would do that. Just backup the data, erase all the partitions and do a fresh install.
Regarding how you want to partition your drives, here's what I usually do.
Give about 40GB for the primary OS (Win7 in my case), and partition the remaining space however you want. Use the small primary partition ONLY for the OS and always store all your files on the other partitions. That way, you can reinstall the OS any number of times without worrying much about data loss.
The advantage with this is that the other 'data' partitions can be re-sized (there ARE limitations you need to look out for, but it can be done). For example, when I later decided to install Ubuntu alongside 7, I re-sized one of my data partitions. Made 200GB into 160GB and 40GB of unpartitioned space, where I installed Ubuntu.