I'm planning a migration/upgrade to SharePoint 2010 from 2007 for our intranet. I'm researching best practices for information architecture to best optimize performance and organization. The farm is small, but gets a lot of use. Currently, there is only one site collection and only one content database. I'm thinking about creating new site collections for each department within the organization and a content database for each. Can this be done on the current 2007 configuration and then upgrade it to 2010 or do I need to just start with a new build on the 2010 server and rebuild each department's sites and sub sites?
I am in the process of doing the exact same thing.
Although the architecture will remain exactly the same, my biggest concern was upgrading the custom solutions to SP2010 (Workflows, Visual Studio solutions, customized pages, XSL stylesheets etc).
There are too may parameters for what you are asking. I would personally ask why you want to split the content database and why you want to create new site collections. Do you have any issues that you hope to resolve?
The biggest change between SP2007 and SP2010 is the Content Type Hub and the Term Store management. This will help you centralize the management of metadata and content types across different site collections. For me this was not an issue. The content database was less than 10GB and a single site collection was enough.
As a very general advice I would say keep it simple. If you do not need a feature don't use it. However, if you need to create an entire new Information Architecture, you might want to create it from scratch in the new environment and then just migrate to the SP2010 farm using a migration tool of your choice.
This is what we did with the DMS of the same organisation but it took one year to complete everything, including training.
Yes, new site collections and additional content databases are supported in SharePoint 2007. The problem you are going to encounter in either 2007 or 2010 is that there is no quick way to restructure/move your current subsites between site collections. You can't do it with the Site Manager (aka Manage Content and Structure) because that is scoped to a site collection. That leaves you with import/export of subsites and/or a 3rd party tool to restructure between site collections.
Restructuring is going to take time and effort, and assuming you have a vanilla farm (no customizations or third party solutions) you may want to get on the new 2010 platform first and get that out of the way. In this case, you should keep your single content database, and start by attempting a test migration to see what obstacles you will need to overcome.
If you follow this trajectory you can then restructure in 2010 but again you'll need to do it using import/export and/or a 3rd party tool.
Ultimately, you need to determine whether restructuring will bring value right away. If this is the case, then perhaps you go the route of creating a new structure in 2010 as you mentioned. And, if a clean restructure is the driver and you'll need a 3rd party migration tool, then why not skip 2010 and go straight to 2013.