Most system configurations can be set up with HDToolbox. It's in the tools drawer of the SYS: partition or the HDTools directory of the Install disk.
Load it up, and it should detect your drive. If it's been previously used in an Amiga, you can go straight to partitioning it. If not, it needs to have an RDB installed first. Press Change Drive Type, make sure SCSI is selected, press New, and then read configuration from drive. Save those changes and your drive is prepared for partitioning.
Partition sizes can be whatever you want. Your system partition should be at least 8 megs, but you'll want more space as you install additional libs, devices, etc. I use 700MB out of my 18GB drive on my main system. Depending on your OS version, it should definitely be less than 4GB and maybe less than 2GB.
Configure the rest of the space on the drive however you want.
EDIT: Oh, and make sure Bootable is checked on your system partition.