Should I use DFS with only one file server?

It really depends on your future plans and if you have remote offices or not. If all you your people are in the same building, I would say keep it simple and not use DFS. But if you have remote offices and have potential to grow, I would implement it.

All the employees are in the same building and we currently don't have any remote offices and there are no plans in the future to add another office.  Our company is roughly only 50 people so I'm not sure if DFS is a viable option for our situation.  It seems to be designed for larger businesses with multiple offices.

You are exactly right. Keep it simple and deploy without DFS

If I deployed with DFS what would be the best file structure to create?  Right now I have the typical C: partition for the OS and then I created a second D: partition to store all the file shares.  Should I create the DFS root share on the same partition as where all my file share folders will be?

Also, if I deploy DFS would it be best to use a 'standalone' DFS namespace since there will be only one server, or should I use the 'Domain' namespace.  My domain controller is SBS 2003 so it will not support the 'Windows 2008' mode in DFS.  I will be migrating to SBS 2011 sometime this year though.

Yes put the root share on D, and use a domain namespace.

After reading these comments I have decided to try and implement DFS as it seems the future benefits are definitely a huge upside.  I will be leaving this question open for now just in case I run into anything I have more questions on.  Thanks for the information and I will be awarding points shortly.

One question that I forgot to ask earlier is when creating the root share, say \\domain.local\data, should I then create all my department shares, ie \\domain.local\data\accounting under the root using 'DFS Management' or should I create the folders within Windows Explorer only?  I'm a little confused as to what the proper management of creating folders under the root with DFS since it seems you can use DFS Management and/or Windows Explorer.

And what would be the best permissions to apply to the DFS root?

You want to leverage the Namespace.  

You need to create a Target Folder under the Namespace, but once that is done you will user Windows Explorer to create all the sub-directories.

example from my environment:
The Files, UserData & ITDATA are all namespaces where the sub-directories are target folder pointers to the actual File server \\FS01\Share1 or \\FS02\Share2  and the Clients Display name really points to \\FS01\Share1

\\Domain.local\    
           |  Files
                   | Clients          
            | UserData
                   | Redirected Folders
                   | Profiles
            | ITData
                   |  Server ISO's
                   |  Apps
                   |  Lab


Note: In the second screenshot there are Target Folder pointer (Shortcuts) and a actual Folder that was created via Windows Explorer.

That folder created under windows explorer is not accessible or visiable if you browse to it via the \\Domain.local\Files.  It only resides on the DFS host server ROOT location.

That makes more sense.  So since I am using 'DFS Management' on the same file server where all my data will be stored, do I even need to create 'target' shortcuts, or should I just create the DFSroot folder, then use Windows Explorer to create all my department shared folders, ie Marketing, IT, Administration and so forth?

I recommend it.
This gives you a more dynamic setup for future implimentations.

I do not recommend storing the data in the root.

Create the Namespace
then create a storage area on your D:\ called DFS_SHARE or something like that.
In the DFSHARE create a folder called accounting.  Then create a target folder pointed to the d:\DFS_SHARE\accounting.  This will allow for growth and easy mirgation.
So if the future you expand to a second server strictly for file shares,NAS or SAN you replicate the data to the new location create a new Target pointer to the New Accounting storage location and delete the old one. You are in business with no down time.

This is very helpful!  Say I created a structure with 'DFS_SHARE' as you mentioned and then put my department shares under that directory, as far as permissions go, would you just set 'DFS_SHARE' for 'Authenticated Users' read-only, and then set whatever NTFS permissions you needed on the department directories, ie 'Accounting,' or would DFS_SHARE be the only folder I need to share?  I'm trying to obtain the most secure permissions as possible.

Look at the Taget as if it is folder as if it is a share.
There you will apply the permission for the share.
The Target folder on the source server is where you apply the NTFS permission.
So it is a two part just like if you right clicked on a folder and shared it out your have the Share permissions and the Security of the folder.

Does the help.

You do not even need to share it since it is on the same machine as your hosting DFS.

You will point the target to the D:\DFS_SHARE\Accounting

The problem I am having is that when I try to create a new target to D:\DFS_SHARE\Accounting it won't allow me to because I can only choose an actual shared folder as the target, nothing on local drives can be selected.  That being said, should I share the DFS_SHARE folder or share each department folder separately like 'Accounting' that are subfolders under 'DFS_SHARE?'

Yes if that is the only way.