Kazaa... run, run far!
In 95% of virus cases that I have seen of late, Kazaa was the cause. The spyware and popups are initially a pain I'm sure but Virii spread like wildfire across file sharing programs such as these.
To Answer your question regarding Kazaa Lite, yes it does seem to be relatively bloat-free. I installed it here to see what files/registry entries were created so I could try to lock it down on our machines.
Compared to the original kazaa it is the lesser of two evils, but if you really do insist on using it ensure you have a good virus scanner and it's kept up to date every single day.