If you're strapped for space you're going to either need to consolidate or compress as you go. A good option for avi compression if you don't want to compromise on quality is something like VirtualDub with the divx codec. That particular codec is very nice in that it will reduce the filesize quite drastically (as compared to the fully un
compressed FRAPS output video) yet retain much of the video quality. Hopefully you won't be taking 5gb of video at a time -- that'd be a killer anyway.
I suggest you do both. Free up some space and compress as you go. This will be probably the most efficient way to deal with it rather than filming and realizing you don't have enough space left on your hard drive to even run your computer.