"But why -- this was because of a older issue with lilo I believe - not being able to read past the first X number of cyclenders or MB ? Correct ??"
Some old BIOS could not read past a certain point on the drive. The only time Linux uses the disk BIOS is during boot. Therefore the kernel had to be near the beginning of the disk on machines using the old BIOS.
"The first X number of MB of the drive will be accessible the fastest - since the drive is a circle, the read / write heads will have to move the least amount of time and space to read the first 100MB, 500MB, 1GB of the drive."
The read/write heads move from wherever they happen to be to the next disk access. The read/write heads do not move back to 0 between each I/O access. Therefore the fastest way to organize your disk is to put the busiest files in the middle of the disk.
"And since swap is used to help out when no RAM is available -- it would make sense to have it at the fastest access point on the drive ??"
Only if you do a lot of swapping. I have 512M of ram and rarely use swap. I went a month one time without a swap partition and my machine ran fine. Therefore I catagorize swap as a very low usage partition when I set up my disk partitions. When I had a 32M Pentium then swap was high usage and I put swap in the middle of the disk. Buying another 32M helped my Pentium machine speed far, far more than swap placement did. When I built a new computer with 512M then swap usage essentially disappeared.
Here is some further discussion of partition placement:
Be prepared. Create a LifeBoat CD.