This is a little bit of a risky business, data can go missing etc. Also, should you decide to have one NTFS partition and one FAT32 partition you will not be unable to copy from the NTFS drive onto the FAT32 drive. Although if you are sure that you won't want to swop anything in this direction then I think I would tend to put up a partition.
In theory there is no reason why you shouldn't swop the entire drive from FAT32 to NTFS as you obviously know, it's really a matter of risk assesment.
I believe the wizard will only allow to to transfer 4 gigs. anyway (if my memory serves me well - I tried it last year - hopeless). You need something like 'Acronis Partition Magic', or 'Powerquest Partition Magic' to enable you to transfer any more than this.