Question 1: Is a WDS optimal for what I'm looking to do (extend range a little, airtunes and skype)? I'm OK with losing some distance on the Express n, since I only really want another 20 line of sight feet to the Express n. Would it impact airtunes much?
The original "static" WDS is the ONLY option for extending "mixed" AirPorts wirelessly. This type of WDS has two major drawbacks: 1) It can only operate in the 802.11g Radio Mode, thus negating your new 802.11n AirPort Express Base Station (AXn), and 2) For every base station added, the overall bandwidth is cut in half ... so starting with 802.11g's 54 Mbps, you be getting something closer to 25-27 Mbps ... plenty still for audio streaming.
Question 2: I followed the instructions on here in setting up the WDS network with names and PW's all matching exactly, ID's in properly, but when the Express n restarts after changing settings, Airport Config Utility can't find it....even when using an ethernet cable tied directly to the computer. Any thoughts?
As you have experienced, setting up a WDS can be somewhat tricky. I would suggest starting over and use these Apple Support instructions as a guideline. I would also recommend that you perform a "factory default" reset on both base stations before starting the WDS configuration.
Question 3: I may just scrap my Extreme g and get another Express n.....can I use another Express n in the way I am currently using the Extreme g above, with remote printing as well as my internet gateway via my router?
Yes, you can use another AXn to replace the older Extreme. With both "n" base stations, configuring an extended network is much simpler and performs much better.