From past experience:
The laws meant to punish the rich (who can afford to store everything offshore) will fuck you over no matter what you do.
DO consult with an accountant you trust.
If you decide to hold for the better tax rate, Murphy's Law dictates that the stock price will drop in an exponential rate to the potential savings.
So there are no surprises, I would set aside at least 50% for taxes. Don't try to figure out what it will be, you will underestimate and end up having to sell your body to write a very large check at the end of the year.
If you owed more than 10% of your tax liability for 2004, you will be required to pay at the end of the quarter you exercise (per the last post) to avoid penalties. If, however, you always get refunds or owe less than 10% of your tax liability, you are allowed one slip up. In which case, keep your tax money earning interest somewhere, and you'll pay the IRS on April 15, 2006 at 11:59 pm.
Of course, this is based upon my Yahoo stock options back in the day. I'd ask an accountant before you listen to anything anyone on the internets says. Laws may have changed, and your mileage may vary. Discount limited to inventory in stock. If this is an emergency, please hang up and dial 911. Call your doctor immediately if you get an erection that lasts more than 4 hours.