Well any of the OS Microsoft released after 2001 requires you to use NTFS, at least on the system partition. (Can junctions link from NTFS to FAT?)
I personally avoid partitions at all, there is ALWAYS space on the wrong partition!

And on a note: you can use my method on any sub-folder aka game, so you can split up the games on different partitions.
Sorry to re-rail & necro this thread...but do you know if there will be any performance losses if I had it set up as follows:
1. Steam installed onto my SSD (so it starts quickly with windows)
2. Symlink pointing to a steamapps folder on my 1Tb drive
3. *some* game folders sym-linked BACK to my SSD (e.g. the ones I play most often for fast loading e.g. TF2)
Basically - does it check the symlinks *before* looking at the disk, or does it follow one symlink, then follow the other.
I.e.
ssd -> hdd -> ssd (and if so...for *every* file accessed, or just once to find the final destination)
or just
ssd -> ssd