I don't think there's any standard or recommendation for using FAT in Parallels.
FAT is unreliable, but you can read and write from both OSes. NTFS is much more reliable, but you can only read it in OS X, so the documents are still accessible from OSX, but you can't save changes to them back to the NTFS partition, but you can still copy them. But since you're running Parallels you can always take advantage of Shared Folders.
Why is NTFS more reliable than FAT? Among many reasons, NTFS, like HFS+ and unlike FAT, is a journaling file system which "(...) is a file system that logs changes to a journal (usually a circular log in a dedicated area) before committing them to the main file system. Such file systems are less likely to become corrupted in the event of power failure or system crash."(Wikipedia).
Also, I don't think it's such a great idea to let OS X write to the Windows partition (and vice-versa) at will, OS X fills any partition it can write to with useless trash and spotlight files, and this is what happens if you use FAT. Besides, it's a good principle to have some sort of isolation between machines.
My recommendation: NTFS
Last edited: Aug 24, 2008