In general, ACS 3.x used to have a "gap" too between
varchar(1000) and varchar(4000) in that if the need was for more
than 1000 chars, varchar(4000) was used. In general, I see little
practical need to limit a varchar to something more than 1000
characters (although I can see some application-specific needs
for certain cases).
I think it would be fine to use text for > 1000, but if there is a
reason to limit the length of the text, go ahead and limit it using
varchar, as Don mentioned.