Is it recommended to partition an external drive used as storage?

With a drive that big, and planning to use NTFS, I'd highly recommend partitioning -- unless I knew I'd only be using the drive for storing large files -- DVD-5 ISOs, DVD video files, multitrack audio, etc.

If you're planning to store small files, you'll get better use out of the drive by splitting it up into drives of 2-300GB. But tweaking for efficiency and performance is highly dependent on the type(s) of data you'll be storing.

In particular, look at cluster size in regards to what kind of data you expect to store. Cluster size is the smallest chunk of disk space that can hold a file. Windows defaults to 4KB clusters for 1TB partitions, but you can use the commandline formatting tool or a 3rd-party formatting GUI to override this (supported cluster sizes are 1K, 2K, 4K, 8K, 16K, 32K and 64K). A 1TB partition made of 64KB clusters can hold DVD-5 ISOs very efficiently, but is very inefficient with very small files.

(I could be wrong about this: this article claims that MFT entries can range from 1 to 4k, so a <2KB file can actually be stored in the MFT. This should mean better performance for that file. I'm not sure if/how MFT entry size is related to cluster size.)

From a practical standpoint, I've never found a real need for a 1-TB partition. I need 3-400 gigs for music, 200 gigs for photos and other random documents, and the rest for storing old episodes of Buffy the Vampire Slayer in AVI format. Splitting that into smaller partitions helps me organize my data. The downside is, if I haven't planned my partition sizes well, I may need more space on one partition or another, and resizing partitions is risky.