On my main A1200 with OS3.5 I use 2 500GB HD's on the primary Master & Slave ports & 2 DVD/CD Burners on the Secondary Master & Slave ports using the FastATA MKIII board...
Not sure which type of interface your using but if it's the FastATA board then you can easily add a 250GB HD without any problems. I use these with a combination of partitions using FastFileSystem & SmartFileSystem and they work fine without any problems (even used a 1TB HD at 1 point with SFS)...
