1. See answer to 3 in gulliver's post.
2. No, not at all. Only a handful of games and apps will take advantage of an FPU. Spend your money on more memory instead (if it hasn't already got the maximum).
3. HOL (Hall of Light)
4. Amiga OS3.1 would be best for your setup. OS3.9 will also work, but it will be slow and don't
install the ROM update with BB2 (Boing Bag 2) or the CD32's CD drive won't work when booting from the hard disk.