I also have a TiBook with 20gb hardrive. I set mine up with a 2-3gb (I don't remember exactly, and I'm at work) for OS9 and the rest OSX.
But I only use OS9 to play dvds. If you use OS9 more, I would probably not suggest that setup.
If you don't use OS9 at all, you could probably use less. I do not know the miniumum size OS9 can install on.