Good discussion here. I largely do what Nathan suggested, with one exception: I prioritize based on when it has to get done.
I use categories (e.g., Home, Work, etc.), and under each, I use high-priority for tasks that have a deadline, normal priority for tasks that have no deadline but need to get done, and low priority for long-range tasks that I don't have to think about.
The additional benefit of this is I can get around the fact that Outlook seems to sort task deadlines
backwards if you sort by date. If you sort dates descending, they come out in the wrong order; if you sort dates ascending, the "no due dates" come up top. I sort by priority first and then by dates ascending, and get the desired effect.
Outlook 2003 also has some predefined views that are fantastic for managing tasks. The "next seven days" and "overdue" views are fantastic, and while you can create them in previous versions, Outlook 2003 lets you quickly switch between views without using the menu bar.
It's totally made a difference in my task organization.

Now, why does Exchange Server Activesync
not support tasks?!? That's one serious omission. :evil:
--janak