1) Does it count as income, and thus may disqualify me for putting it into a Roth IRA? YES, the support will be counted as income, but generally only when it is forgiven, not when you receive it. Remember that you will have to pay taxes when this is forgiven, so be prepared for this. It has been our position that this is income subject to Self Employment taxation as well as income taxes, so the liability can be surprisingly large.
2) How do I minimize the tax hit at the end of year? Apparently none of the money is taxed when initially disbursed. Since it is not taxed until you fulfill your employment obligation, you won't have any significant tax issues related to this money currently. When it is forgiven, you could consider setting up a either a SIMPLE or SEP retirement plan for yourself, which would give you a deduction and at the same time helping you fund your own retirement.
3) Where do you advise putting the money if I plan to live conservatively and save as much as possible (in case I decide to move and pay off the debt)? As a rule, interest bearing investments (money market accounts, CD's, bonds, etc.) are more conservative investments and might be your best bet. If you fulfill your obligation, your tax liability will usually not be more than about 40% of the funds (15.3% SE tax, plus a range of 20-25% for income taxes), which is a lot cheaper than paying the entire amount back, plus interest! Talk to a good investment advisor about the most appropriate investments for any free cash.

There is some precedent for the IRS to treat the money as taxable when disbursed, but in our experience this has never happened.

Good luck!

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