Yeah um don't listen to that guy that mutterred something about your bike not being able to keep up with current 600's..... I know a guy with that exact bike, which I believe only had the filter, a exhaust, and jet kit, and no engine work and it was dynoing at around 109 hp at the rear wheel which is pretty comparable to bikes today.
Also keep in mind that I had a 2000 600f4 that had the same mods (filter, exhaust, and jet kit) which dyno'd a maximum of 98 rwhp and I kept up, if not beat him, all the time. That's the difference a hundred pounds of body weight will make.
You definitely need to do an exhaust, and if you do so you definitely need a aftermarket filter at the minimum. They provide the extra air flow you need for the extra fuel you can add w/ your jet kit, and to balance the more air you can kick out with your aftermarket exhaust.
I have not seen any 'driveability' issues in low to midrange power band (or anywhere) on all 4 of the bikes I have done these mods to and I have done the mods one at a time. (600f2, 600f4, ex250, and a 900rr).
My experience overall is that the filter normally doesn't increase hp by much if at all, it does normally smooth out the powerband though which makes the bike more fun to ride. This smoother powerband is also probably the reason why most people say they feel a 'seat of the pants' increase in power. It does also allow you the airflow to play w/ jetting and exhaust. I'm a K&N guy, but have no experience w/ other brands and assume they would be just as good.
The key to these bikes in general is solid carb work. It took me a long time to iron out the kinks and for a beginner your best bet is to take it to a trusted mechanic and have him tune it on a dyno while tweaking your filter, carb, and exhaust setup. I would argue that any driveability issues are more then likely from a poorly tuned jet kit then any issues with the filter itself.
Do those three mods and you ought to be seeing 100-110 hp which brings your bike to simply a matter of skill and who has it. You'll prob. get toasted by anything other then a 600, but you ought to be able to keep up w/ new generation 600's at least in the straight lines we have here in Florida. If you are not happy w/ that, I recommend selling your $3500 kawi, going Honda like me with a nice used fireblade, and start enjoying toasting modern literbikes *grin*.
Rob