Large Tables and performance

[Azel Low]

I am desigining my database and was in a slight debate with my friend about this issue and hope if you can enlighten us on this.

We have a table [table1] that is expected to grow by ~5,000 records a month each ard 50KB in size.

75% of our queries (basic SELECT statements) on this table will be on the latest 500 - 1000 records.

All we can think now is this:

1) Should we create 2 tables [table1 and table1archive] and perform our queries on table1 (75%) and both tables for the rest of the 25%

*A cron job will move the records from table1 to table1archive

2) Create a table [table1] and use Limit clause for our select statements

Option 2 sounds simple and good but I would like to know if there will be a performance hit when the records reach say 200,000 records or more.

Would really like to know which of the option gains better performance and are there are other ways in which we can design such tables for better performance?

Thank you.