When to raise domain functional level?

Solution 1:

No, given that you will not be adding any 2003 DCs back into the domain. Raising the domain level will not affect the workstations.

(UPDATE)

Your Windows 2000 member servers should have no issues after the upgrade to 2008 R2 function level.

Solution 2:

Generally, updating the domain functional level provides more functionality.

The main features that 2008 domain functional level provides are:

1. Multiple password policies per domain
2. User-viewable last logon information
3. Increased Kerberos encryption
4. DFS replication for SYSVOL shares

2008 R2 domain functional level further adds:

1. Better and more automated service account management
2. Security logs and access lists based on authentication type

Additionally, upping to a 2008 R2 forest functional level adds an AD "recycle bin" for minor oopsies.