If you are prepared for a computer crash that might result in total loss of ALL information and applications you have on your computer, it might be ok to turn off System Restore. Otherwise it is a very handy item to have lurking in the background to save your butt in the event of a system crash............or a program that you installed that doesn't play well......or any of several other things than can go wrong.
Short version: System Restore is a very good feature to have fully functioning. I would not disable it.
I never have it turned on. If you are asking if it is just 'ok to turn it off' then, sure, it's not going to effect much, in fact, it could possibly improve system performance (although not by much). As john3347 stated above, it can come in handy, but in all honesty, I have never benefit from it. I would rather clean install the OS over a system restore, but, my system is setup in such a way, that re-installing the OS is a snap.
You can set it to use less disk space if you want. My W7 installation is on a relatively small partition at 34.9 GB. It set itself to use a maximum of 2% of the drive space. I'm not sure but I think it would have set itself to use more if the partition had been bigger. It's using 764.9 MB of space. I could set it to use 1% if I wanted. It only allows me a small number of restore points but I'm ok with that.
I go through Control Panel to get there. I keep mine set to the "large icon" view so I click on "System".
If yours is set to "Category" view click "System and Security" then "System".
Then click "System Protection", then "Configure".
Under "Disk Space Usage" set the slider wherever you want it. Then click "Apply". There will probably be a warning about your number of restore points but it's up to you what to set it for.
Out of curiosity, could some of you guys with larger drives let us know what yours defaulted to? I'm wondering if it does really set itself according to how much space is available.
Aside: Hey mike2k9, I used to live out off of Marbach Rd in San Antonio. My Mother still lives there.