As you have mentioned the DB\Events folder is taking most of the space. The DB\Events folder will stores all the events generated from the client machines which supposed to pass to your ePO Database to store into it. If the eventparser service is not running or there is any issue with eventparser, those evnets will stuck into DB\Folder and not move to ePO database. So please check if the ePO eventparser service is running, if it is running try restarting it.
Answer of your questions:
do the logs play any key role other than just giving details?
Ans: Here (DB\Events) I don't think you will see any logs, you will see only events which is generated by client machines and reported to ePO where ePO supposed to pass those events to database and store into it. Those events are very usefull when we do reporting in futures to know what happened in past.
For example: Suppose there were 2000 machines infected in year 2012 and today in 2013 we need a report to know how many machines were infected in year 2012 from Austin location. So here we are going to create a query in ePO to get that reports and that query runs and search for the events which were stored in the database and will give you the reports.
Also the logs are very important for trouble shoot the issue if incase something goes wrong with the ePO server.
what will happen if i just empty the folder then have EPO do new logs afresh?
Ans: if you just delete those events you will get the data if you need reporst in future to know what happen in past. But yes the ePO will work fine and store only new events into database.
If you wish to change the current ePO installed drive C:\ to D:\ then you can refer aticle KB71078 or if you want to migrate your current ePO server to a different server you can refer article KB66616.
you can search for these articles from: http://kc.mcafee.com