I have a single first draft until I'm done with the first draft. If I'm working on a really gnarly bit of rules, I will often break it into a different document, and iterate that document before rolling back into the first draft.
Pretty much what I do as well.
In addition, I sometimes work on large sections in simple text documents rather than in Word because Word sucks all kinds of ass. Once I get the text the way I want it, I'll paste into Word and add formatting. I find that for me it can go faster that way, though it depends on what exactly I'm working on. For instance, the sections I wrote for FM3085,
Master and Minions and ER3052 were done (or at least started out) that way because they were mostly huge chunks of straight text, but the DATPs I've done weren't because of the more involved formatting and sectioning those use.
On top of everything, I do use actual version control. I have set up an SVN repository for all my important BattleTech files (current research, projects in various stages of work, frequently used reference docs, etc.) and do daily check outs/ins. I don't use a lot of the fancier features, but I find this lets me keep track of things and also protects me to an extent from disk crashes and such. There have been times in the past when I needed to go back through previous revisions the find a document I've archived or an earlier version of something I'm working on.
