You should start H-1B

petition before your OPT expires. You also should apply for F-1 change to H-4 before your OPT expires, not wait for 2 months grace period. This is a general idea for any situatio like yours.

Specifically to your case, It depends on when your OPT expires. If it expires before 7/31/05, you should change F-1 to H-4 first.
If your OPT expires after 7/31/05, you definately should apply for H-1B now, does not matter use 20,000 or 2006 cap starting on 10/01/05. If your H-1B starts on 10/01/05 and there is a gap between your OPT expires, that is fine for keeping legal status since you have 60 days grace period (that's why 7/31/05 is a key date - 60 days will be 10/01/05 you can use H-1B). Simply you just need to be off the payroll during this grace period since you are not allow to work during expiration of OPT and starting of H-1B.