Managing huge mailboxes
Exchange 2007 will make this particular problem disappear... no, really. (Check here for a detailed explanation of why). First, it removes the 16GB limit. Second, its I/O footprint is hugely improved over Exchange 2003, which in turn is an improvement over 2000. Third, it features a ton of other performance and security improvements.
Outlook 2007 SP2 also includes a bunch of fixes to provide better performance for large mailboxes, too. With the combination of the two products you should be good to go.
Depending on PSTs is asking for trouble, as they aren't centrally managed or backed up.
More broadly, you might want to investigate SharePoint as a document store so that your users gain revision control and check-in/check-out functionality, not to mention moving all those documents out of your Exchange databases.
Since exchange 2007 has 64-bit support you could cram in more memory in the machine, always good. Exchange 2007 std has no storage limit in software, so you could have an 16TB exchange store if you wish.
If you upgrade to exchange 2003 you could enlarge the Informations Store by editing registry values and restart the Information Store Google: aa998066 (technet link) It seems to go up to 75GB with Exchange standard. Then you wouldn't need to use PST files because of storage reasons.
Establish an brick-level backup of the mail store and then make the users remove stuff thats really old and ensure them you can recover the emails for them lateron. To lessen the load on the exchange server. Maybe set restrictions on incomming/outgoing emailst to 5MB? Limite mailbox sizes also? so users have to do some cleaning up now and then.
Just some ideas, im no fan of pst files. As for the client, sure it can handle it. We got an really wierd setup for the US-folks here, a user inbox they forward every single email to.. 28GB with approx 200k items in the inbox. Use non cached mode on the client and you should be safe.