Trying to understand IMAP and outlook on a SLOW Vista machine

it's a 4GB vista machine. is 4 GB for mailboxes so large enough? What's your view of vista : ) ?

You mean 4GB of memory? I can't really comment on the performance of your computer overall without knowing more about it, but 4GB of memory is plenty for most computers. I don't see anything wrong with Vista, although many people dislike it because of some of it's more annoying quirks, it is not going to have any significant affect on the performance of Outlook.

He's got these mailboxes on a desktop also (which is also slow) and on his phone he says.

That is pretty standard. The phone is either acting as an IMAP client similar to the computer, or it is downloading a copy of the mail via POP and leaving the messages on the server so that the desktop can download a copy too.

Is exchange a better answer than imap?

It is certainly a more sophisticated answer and it scales much better. Sync with mobile devices is much better, and Exchange provides Calendar and Contact sync. In general, yes it is much better. On premises Exchange servers integrate with Active Directory, which is important to reduce the administrative overhead of a company with more than a handful of employees. An on premises Exchange Server is quite expensive and only appropriate for a mid-size business. Hosted exchange (e.g. Office 365) is more in the affordable realm though for individuals and tiny companies.

He has seperate PSTs for each IMAP and POP mail account.  are there pros / cons for a single PST? office 2010 PST max size is 50GB?  

IMAP uses PST files technically, but don't think about it that way. It is strictly for caching the contents of the mailbox on the computer. You cannot have an IMAP account and a POP account share a PST file and you can't treat the PST file as any actual storage of your mailbox. Remember with IMAP the messages are stored on the server. Anything local on the computer is just a cache and should be treated as volatile.

A PST file when used traditionally (e.g. with POP accounts), is a storage container for your emails, calendar, contacts etc. If you have multiple POP accounts, you are welcome to point them all at a single PST file. Or, you can have each one save to a different PST file. Which way you choose to do it depends on how you want to organize your email data. There's no significant difference in performance.

Some people have several email accounts and want them all to download to the same mailbox in Outlook (they don't care where the mail came from, they just want to see it all in one place). Other people want to keep each email address separate, so they have multiple inboxes, one for each account. Which way you go is entirely up to you.

Office 2010 PST files can get pretty large. I'm not sure if 50GB is the actual limit, but I have personally seem 10-15GB ones without any issue. Suffice to say the maximum size is so large that you don't need to worry about it.

Hosted Exchange comes with a 25GB limit mostly because that's what Google was offering with their Google Apps product, which is what Office 365 directly competes with. Hosted Exchange works fine even with large mailboxes so long as you let Outlook sync that initial copy of your mailbox. As a rule of thumb I'd try to limit it to 5-10GB, delete old mail if you start to get bigger than that. But really, 25GB is a reasonable upper maximum.