1. Only your top score is recorded. The higher the combo the better the score. Basically, High Combo C > Low Combo S. Don't judge your score based on the grade, judge it by combo and accuracy.
edit: if you had an S, and got a higher score but it was a C, that C score will replace your S score. osu! will only look at your highest score on each map.
2. your max combo^0.8/song's max combo^0.8 factors in how much pp you'll receive. Basically, if you only get a half combo, you're already saying good bye toat least half the pp you could have achieved if you full combo'ed.
3. If you want to gain pp, full combo songs. Easy as that. If you want to improve, keep doing what you do. But know that full combo-ing songs also helps you improve stamina and consistency... they aren't completely useless to improving.