how big is the drive that holds your "My Documents" folder? if you are scanning multiple, colour, double-sided pages at high quality resolution you may end up with a single doc that will take 100MB+...
Nope - no handwriting recognition/transcription on Scansnaps. At least not on the S300 or discontinued S510 models. The OCR is used only to take the scanned images (all scans with these scanners are as images) and convert the text to searchable text. Evernote has handwriting recognition, though I haven't used it much and don't know how accurate it is. I believe that Microsoft OneNote 2007 also can do this; OneNote 2010 might be improved over the previous version.
Scansnap is not very good at all for document organization. As a matter of fact it is pretty poor. E.g., you cannot import any other documents (PDF) and have them made searchable; only that which was scanned with the Scansnap. So if you have a lot of PDF documents already you would have to scan them all over again. Also, Scansnap doesn't allow you to use Paperport with it, like most scanners do.
I have the S510 model. With it I've had luck with setting the scanner for black and white (under the scanning tab), then going to the options button on the same tab, and adjusting the the brightness. For this to work, the box for text only must be un-checked. I find the higher the resolution used, the better the result. Remember, I'm using the software for the S510, so I'm not sure what your sofeware looks like.
Hope this helps.