Right now, I have a Nikon 18-200mm f/3.5-f/5.6 VR lens. I like it, but want more telephoto range and would also like to be able to use faster shutter speeds. I am interested in the 70-200mm f/2.8, but would probably want a 1.4 or 1.7 teleconverter to get my reach. Another possibility is the 70-300m f/4.5-f/5.6, but then I don't get the aperture, though I do save a bunch of money. Are there any other suggestions? I shoot all handheld, and would prefer an image stabilized lens. My camera body is currently a D5000, though I could see myself upgrading, but probably not to full frame any time soon.
I don't know about nikon, but I did the same thing on the Canon side. I had a junk 70-300 lens, and decided to upgrade. I ended up buying the 70-200L IS, plus the 1.4 teleconverter. You just have to, they're both white :) Since then, I've used the lens itself quite a bit - zoomed all the way out for portraits, zoomed in for some sports and wildlife. I rarely, very rarely, take the teleconverter out of my bag. Why? Not really sure. I lose two stops, so my fastest is f/4. The picture is not quite as sharp. It makes an already heavy and big lens even heavier and bigger. If I had to do it all over again, I think I would just buy the super sharp telephoto with stabilization (70-200), forgo the teleconverter, and use my crap 300mm if I really, really need to reach out.
As I am not a Nikon user (nothing against Nikon though, excellent gear), I can't offer any specific answers. However, when it comes to using a teleconverter, you will really want the fastest lens you can find.
Tacking on a teleconverter tends to reduce your effective aperture. I know that with Canon cameras (and I believe this is the case with Nikon bodies as well), autofocus and metering are dependent on having an appropriately wide aperture. An aperture below f/5.6, maybe as tight as f/8, may still be used to autofocus if the camera body is good enough...but generally you lose AF ability when the maximum aperture is so tight. Even with a camera and teleconverter that provides the necessary info to the camera so it can compensate its metering, adding a teleconverter still tends to skew the results.
I think the general rule of thumb is that the magnification provided by a teleconverter is nearly synonymous with the reduction in lens aperture. A 1.4x converter will increase your focal length by 1.4x, but reduce your maximum aperture by at least 1x, maybe 1.4x. A 2x converter will increase your focal length by 2x, and reduce your maximum aperture by about 2x. That would mean that, with the 18-200 and a 1.7x, at the long end, your effective maximum aperture is f/7.1 - f/8 for a focal length of 340...thats pretty slow. However, with the 70-200mm f/2.8, your effective maximum aperture at the long end is f/4...which is actually pretty good for a 340mm focal length.
I have a Canon EF 100-400mm lens, and with a 1.4x teleconverter on it, even though that effectively gets me a 140mm-560mm focal range, it is so dim that I can't autofocus, and the meter, even though it is able to compensate to some degree, is still pretty inaccurate and I have to use full manual mode to get my shots to come out right.
I believe that the 70-200 accepts a few specific 1.4x TCs quite well.
But, the 70-200 and 70-300 are totally different beasts. One is a inexpensive, slow consumer lens and the other is an expensive, fast pro lens. And good TCs are not cheap (more than the 70-300 alone?).
Also, there's some confusion about how much aperture loss there is from a TC. A 1.4x TC will lose one stop (f/2.8 becomes f/4) while a 2x TC will lose two stops (f/2.8 becomes f/5.6). This is defined by the laws of optics.
Some traditionalists would probably want to stone me for suggesting this, but have you thought about cropping as an alternative? Using the 70-200 2.8, you can cut off the outside areas of your photo to digitally zoom in on your subject/scene. The D5000 is a 12.3 megapixel camera, and it can withstand some cropping without any noticeable degradation in image quality or sharpness.
It depends what you want to do with the final images. If you are mainly using them to view on a screen (i.e. on the internet) and/or to print smaller sizes like 5 x 7 or 8 x 10, you can do quite a bit of cropping and, assuming you know the basics in lightroom or PS, it's a piece of cake to make it look 100% inconspicuous.
Ideally, I'd suggest the 300 f/2.8 (one of my favorite lenses)...but that would be assuming price is not a concern.
Have you considered a prime lens? Are the situations you shoot in typically areas where you have the ability to physically move away or towards your subject? Longer primes are much faster than telezooms. The 300 f/4 is an outstanding lens, and you can get a used one in good condition on ebay for around $900 (new they are about $1300).
Since this question was asked, Nikon has released a VR II version of the 70-200mm lens. The original had a reputation on FX bodies of being a bit soft in the corners, but the VR II is much sharper in the corners than the original version. Paired with the also new TC-20E III 2x teleconverter, you can get amazingly sharp images. I know many teleconverters at 1.7 to 2.0x start to get soft, but the newer Nikon TCs paired with selected lenses, including the 70-200mm, are very, very sharp.
And what wasn't really mentioned in the answers, which I think is often overlooked and is very important, is having image stabilisation, which is what I think gives the 70-200mm + TC a big advantage over something like a 300mm f/4 (non VR). I've shot between (effective) 300mm and 600mm on a monopod and had a very hard time avoiding camera shake - having VR makes a huge difference (at least with my probably poor technique).
Nikon has two 70-300 lenses. The older one is a cheap consumer lens that is horrible at 300mm, but the newer VR version is a completly different beast. It's actually a very sharp lens, and again has image stabilisation. Not quite the quality of the 70-200 though, and while it's a fraction longer, it loses the potential of adding a teleconverter (f/5.6 at 300mm before adding the TC).
So using the 70-200 at it's longest focal length, with 2x TC, plus 1.6 crop factor gets you past 600mm with really good image quality.
Even if you go full frame at some point, my experience is you can shoot a D800, either in DX crop mode, or just crop in post so that you end up with the equivalent crop as the DX body, and obtain sharper results than shooting the same lens combination on a DX body (at least the D800 trounced the D90 side-by-side when I tested it a few weeks ago - but the D90 is not the most current DX admittedly). The point is, with the resolution of the D800 you can get that crop factor anyway by cropping in-camera or in post.
I've owned the Sigma 150-500mm (not bad, but 70-200 + TC thrashes it) and lust after any f/2.8 of 300mm or longer, but unless you are a dedicated wildlife or paid sports photographer, it's hard to justify those lenses, as they sit at home a lot, and are cumbersome to carry around. A TC is small and can be added on when you need it, and when you don't need it you have the versatility of a 70-200 lens that is suitable for a lot of other photography.
So unless you plan to do a lot of wildlife or sports shooting and can justify a big lens (and we're talking $6-10K for a long f/2.8 lens), I'd go with the super sharp 70-200 and add a TC. The 70-300 probably won't satisfy you in the end, and you won't be able to add a teleconverter.
I have the previous version of the Nikon 70-200 f/2.8 and rented the 1.4TC and found that it was a little soft for my taste. Once you get used to f/2.8 and the creamy bokeh you can get its hard to drop to f/4. I was glad that I rented it instead just to find out if I would have wanted it. The extra reach was nice though.
Got me a Sigma 70-200 f/2.8 EX with its paired Sigma EX 2x TC. Very good combo, extremely versatile. Would I have liked a 70-200 + 200-400 Nikkors? Of course, but not at the price for them (which I simply can't afford, and if I could would still have considered excessive for what I use the lens for so wouldn't have purchased it).
It's not perfect of course, the 200-400 can be used in lower light than my 70-200+TC for example, and probably is superior optically, certainly at the far end, but what I have is good enough.
I have owned the 70-200 2.8 VR and the TC-17E II for three years and while I don't use the telecoverter much, it comes in handy when I need that extra reach for photographing sports action or zoo visits. There is no doubt that if you shoot with the t/c attached, wide open at f/4.8, and zoomed in all the way to 200mm that images are softer. But, there is a way to get good performance out of this combo if you stop down a bit and/or zoom back a bit. There is a website that explains this in much more detail, with photo examples, located here.
I don't own the 1.4 t/c but I have heard that there is only a slight noticeable difference in sharpness between the 1.4 t/c and no t/c used, and the methods described above aren't that necessary.