But if you do the function based index, you actually increase the stored size, right? Seems like a microoptimization to me that I would only do if I really have to.

For the searched column only?

If you are greatly concerned, SQL Server and the Sybase database from which it emerged have a native boolean data type.

Another benefit of this scheme is that adding another boolean means using the next power of 2 in the existing integer, assuming room remains. No new column necessary.