If you are overhauling a site, one of the things to realize is that once AdSense has indexed those pages, it seems to take a signigicant amount of time before they ever come back and check. So those ads could be displayed as targeted ads to whatever the previous content was on that page, before you removed the content and left the AdSense. And it will continue to show those ads until the mediabot happens to stop by to check again - then it will likely start to show PSAs.
There have been complaints on the boards here about pages with content that change frequently, because the bot does not come back on a regular basis to recheck the page.
<edit>clarity, bad sentence!</edit>
[edited by: Jenstar at 7:36 am (utc) on Sep. 11, 2003]
Nick it is up to you, but I doubt that 404's fit within AdSenses TOS if you are prepared to risk it fine but I do not recommend it, especially if you plan to use AdSense on your newly designed pages etc.