I still plan to hire the contractor, just wondering if there are pieces of the work that will be done that may be better to have done by hiring myself? I have a flooring company we used for the main house I plan to use again for this. Things like that. :)

All depends on how many "things like that" you are talking about. You can probably choose the flooring company without hurting any feelings but you certainly can't split many other duties or things will jump tracks. Ask the contractor what he thinks,everyone is different.

You can do as much yourself or have people you choose do as much as you want. You have the money. You're not marrying this person. You're paying for his time and expertise. That's managing the project and picking who does what. Hopefully from competent subs he has had good experience with. What would you do if his quote came in twice what you received from the other two bids you got?(I hope you're getting bids) You control your project. You can pull any permit yourself. Everything depends on how much effort you put into the project. The scale goes from zero all the way to diy. With an equally sliding cost structure. When I pick someone to do something I have to know everything about the job to be able to evaluate his relative skill.

"I can't think off hand what else might be needed... "

You've just answered your own question. You have no business second-guessing your GC, let alone attempting his job on your own.

"... one of my friends mentioned whatever I have the contractor do he's pretty much contracting out and I'm paying him to pay other people to do it."

Your friend is probably correct. Your GC is going to sub out a lot of the work. Just how are you going to be sure you're not going to hire a sub your GC has already tried and fired? How much more work do you plan on providing to these subs compared to him?

His "been there, done that" with a particular sub has great value to you. His ability to pressure a sub when necessary is too. You have neither of these without him.

"having the contractor draw up plans for designing up a garage apartment conversion. "

Have you checked, is your area zoned R2? When converting a garage to a living space there are building codes on insulation, windows, etc.

Also you will need permits.

"Have you checked"

No need to, shes got it all under control

In my experience as a homeowner, the great thing about hiring a quality general contractor is all of the coordination they do. If the project is well managed, it's like watching a dance as the subs come and go at just the right moment and the work keeps moving forward. Remember that much construction work has to be done in a certain sequence. If you try to do some of the sub-contracting yourself, you risk long delays.

Plus, if the sub you hire screws-up, you're out of luck. You could be left with sub-standard work, incomplete work, or worse. If the GC does the hiring, they assume responsibility for the final product. As someone else stated, a good GC has good subs that they work with regularly. It's a mutually beneficial relationship that works in the homeowner's favor. IMO, a good GC is worth every penny. And I'm cheap!

Good luck on your project!