Thanks for the input.
sak, the choice of FAT16 partition for the swap file is for performance. I dont need either the security or the journaling features of NTSF (and the consequent overhead) for it; since FAT16 is small, it will be cached in memory.
owensdj, thanks for the input. I should have explained that the Backup partition is for kinda logical backups. I will be doing software development possibly without a source code control system. This is a backup to guard against stupidity rather than drive failure!
The System Image partition is likewise not to guard against drive failure but to guard against bad installations etc. I am not quite certain about the need for this. I have read that if you mess something up and have to reinstall the OS, it will be easier to reformat the System partition and simply copy the Image onto it (with softaware like DriveImage). I have had enough bad experiences with installing rouge (even Oracle is a rouge sometimes) apps on NT and having to reinstall the OS. But XP may be different. I would like more advice on this partition. Will it be of use with XP? Will it be useful to have this when trying to tweak XP and you want to go back to the "last good" state?
Re the Share partition - I wasn't sure about this either. So you are saying that my Win95 system can directly see shared NTFS files on the XP system? I thought only NT4 SP4 and above could see NTFS partitions. Am I mistaken?
I have come accross posts that suggest that keeping the Temp file on a separate partition will reduce fragmentation of OS files. Seems to make sense. You guys dont think so?
Keeping a statically sized Swap on a separate partition will also ensure that it does not get defraged. Also I will be dealing with applications (App Servers, Databases etc.) that are memory hogs. I will also be attempting to stress the memory to test scalability of applications. Hence the need for a robust swap.
Part of the thinking behind having the Backup and Image partitions was also to block out the innermost part of the disk, so to speak and reserve it for files that are seldom accessed. Otherwise these files will occupy prime drive real-estate towards the outer edges.
Though I too was against over partitioning, I have not heard many reasons that make too many partitions bad, however there are a number of reasons that too few partitions may be bad. Perhaps the only convincing reason that I have come accross to not partition is suboptimal file placement (esp the swap) and the inability of XP to optimize it over time. Can someone comment on this? XP's optimization also seems to target fast system and application startup rather than performance once it is started up. I dont mind waiting for my app server or database or IDE to come up. Once it is up, I want it to be fast. Anybody have thoughts on this?
So what is the downside of overpartitioning. There must be something.
ScrewFace, I agree about the second disk. I will be getting one, once the wallet fattens a little. 

 When I do get it, I'll put the swap on it as the first partition. My previous plan was to do RAID0; but I have read recently that the performance improvement is not much except for specific applications. I need to find out more about this.