I know that say given a md5/sha1 of a value, that reducing it from X bits (ie 128) to say Y bits (ie 64 bits) increases the possibility of birthday attacks since information has been lost. Is there any easy to use tool/formula/table that will say what the probability of a "correct" guess will be when that length reduction occurs (compared to its original guess probability)?
Well, since every extra bit in the hash provides double the number of possible hashes, every time you shorten the hash by a bit, there are only half as many possible hashes and thus the chances of guessing that random number is doubled.
128 bits = 2^128 possibilities
thus
64 bits = 2^64
so by cutting it in half, you get
2^64 / 2^128 percent
less possibilities
Crypto is hard. I would recommend against trying to do this sort of thing. It's like cooking pufferfish: Best left to experts.
So just use the full length hash. And since MD5 is broken and SHA-1 is starting to show cracks, you shouldn't use either in new applications. SHA-2 is probably your best bet right now.
I would definitely recommend against reducing the bit count of hash. There are too many issues at stake here. Firstly, how would you decide which bits to drop?
Secondly, it would be hard to predict how the dropping of those bits would affect the distribution of outputs in the new "shortened" hash function. A (well-designed) hash function is meant to distribute inputs evenly across the whole of the output space, not a subset of it.
By dropping half the bits you are effectively taking a subset of the original hash function, which might not have nearly the desirably properties of a properly-designed hash function, and may lead to further weaknesses.