The whole idea of using "Different first page" is to avoid use of a section
break. Section breaks just don't work for letters because if you start
typing at the beginning, you will just keep extending Section 1 unless you
intentionally start typing after the break, which most typists won't
instinctively do. Not to mention that, as you say, a template with a section
break will always produce two pages even when only one is needed. The only
case where section breaks make sense (sometimes) is when you have a
significant logical break, such as after a title page or TOC, and the second
section will always be needed.

To answer your specific question, no, you absolutely don't need two
templates. The solution I describe will work regardless of how many pages
the document has. Word will remember the Header/Footer to use when the
document exceeds a single page.

Wendy,

The idea is that you have a single template that works no matter how many
pages you have. The continuation page header is there in the template even
if your document is only one page. You don't want the section break.

For more, take a look at: How to set up letterhead or some other document
where you want one header on the first page and a different header on other
pages. http://www.addbalance.com/word/headersfooters.htm This gives
step-by-step instructions. (It also has the following links)

Some other pages to look at:

Letterhead Textboxes and Styles tutorial
http://addbalance.com/word/download.htm#LetterheadTextboxesAndStylesTutorial

Template Basics
http://www.addbalance.com/usersguide/templates.htm

How to Create a Template - Part 2 - essential reading
http://www.mvps.org/word/FAQs/Customization/CreateATemplatePart2.htm

Word "Forms"
http://www.addbalance.com/word/wordwebresources.htm#Forms and

Word for Word Perfect Users
http://www.addbalance.com/word/wordperfect.htm if you are coming from a WP
environment (or even if you are not).

Hope this helps,