Time Machine is intended to be a fully automated incremental backup solution. The first backup will take an excessively long time (depending on the amount of data you have to backup), but subsequent backups will be quicker as it is only backing up the files that have changed. If you are turning Time Machine off on a regular basis, you're actually shooting yourself in the foot as you're just making the backups that you do let happen take a lot longer.

I recommend people plug in (via enet) while they do the first backup, as it will run 10x as fast. Also keep up to date on Airport firmware and software updates as they've both made the Time Machine / TimeCapsule interaction much more stable (reducing the number of times that it just stalls out for hours on small incremental backups).

Second, TM AUTOMATICALLY deletes old backups when it runs out of space on the drive. You shouldn't ever have to delete a backup, TM does it for you. The actual file listings inside TM backups are a crazy listing of links and aliases that point to previous versions of the files and holy gifts from god. Altering any of them risks irreparable damage to the space-time continuum.

Third, you can add an USB drive to the TimeCapsule and use that as a Time Machine backup destination as well. So, a 1 TB USB drive would give you extra space as well.