Risks of Switching Between Simple & Full Recovery in SQL Server 2005
In this situation you should first investigate what amount of data loss is possible-- i.e., whether you need point in time recovery at all times.

If you DO need to be able to restore up to the minute, then breaking the log chain by switching to the simple recovery model is not acceptable. You lose the ability for up to the minute restore after the final log backup is taken prior to switching to simple, and you do not regain it  until  you have switched back to FULL and then performed an additional log backup. 

If you do NOT need to be able to  restore up to the minute, you can investigate using the BULK LOGGED recovery model as a better alternative than switching to simple. Do note that  you will still have a large transaction log backup after completing BULK LOGGED transactions, however.

Here is a helpful MSDN reference on switching from the FULL recovery model to either BULK LOGGED or SIMPLE.

From the context of your question, it sounds that your database log files are on the same drive as your tempdb files. If it is possible to isolate your TempDb files to another drive, that would be beneficial for management purposes, as well as performance (depending on your drive layout).