Service Provider Architecture

We're developing a hosted application that will be used by hundreds of
client companies, each with its own database. Our first release of this
product separated each customer into its own virtual directory with a copy of
the code (classic ASP/IIS 5). We want to design the next version so that
there is one virtual directory, one common copy of the code.
are we losing any application isolation by doing this?
Under IIS5 by separating each customer into a virtual dir, we created a
separate "application" that could be pooled or isolated. Under IIS 6, do we
have to do the same thing or is there a way to break a single "site" into
multiple application pools. It seems that the default is to have an
application pool per site.