Coach Gene Shue says the Washington Bullets are a better team right now than they were last season when they took the National Basketball Association by surprise, but he still is uneasy with the start of the regular season only five days away.

Shue said that despite the team's improvement, the Bullets still might have slipped a notch behind the big-spending teams they must beat to make it back to the playoffs.

"I know we've improved," Shue said yesterday of a team that won 43 games last year and made the playoffs. "But I don't know if we're keeping up or falling further back because of all the changes the other teams in the conference have made. I won't know that for awhile.

"It seems that all of the other teams have either spent money or made deals to improve themselves. We didn't take that approach, so the only way we could survive is through self-improvement. That was the tone we set in training camp. We had to improve from within and I really think we did, but will that be enough?

" . . . We're going to go out and play defense every night and try to execute our plays. Last year we weren't ready for the season to start because the players didn't really understand what we were doing. I know what we're going to do every game now, though. We know that the key to our being successful is to do all of the small things most other teams don't always do, like getting back on defense and moving when the ball moves and being in the right position."

The Bullets ended one of their most successful preseasons Saturday with a 95-93 victory over the New Jersey Nets in Norfolk. After losing the first preseason game to Atlanta, the Bullets won their last five, holding the opposition below 100 points each time.

Shue now has until 6 p.m. Thursday to cut the roster from 16 to the league limit of 12. There has been speculation that the league may reduce roster size to 10 or 11, but Shue and General Manager Bob Ferry said they are planning for and hoping it remains at 12.

"If the rosters are cut to 10 it will be a shame because then you'll have to go with sheer talent, even if a guy happens to be a jerk," said Ferry. "At this point, we just don't know who we're going to keep."

Shue is set with his starting lineup of Spencer Haywood and Greg Ballard at forwards, Rick Mahorn at center and Frank Johnson and Bryan Warrick at guards. That unit started all six preseason games.

Jeff Ruland and Charles Davis also are safe and likely will get as much playing time as the starters. Kevin Grevey, who hasn't practiced yet because of a torn abdominal muscle from last season, will likely begin the season on the injured list.

The Bullets then must choose from among John Lucas, Kevin Porter, Don Collins, Billy Ray Bates, Dave Batton, Steve Lingenfelter, Carlos Terry and Garry Witts. Who stays will depend on the final roster size; Ferry also may make a trade.

"I don't know what will materialize, but I'm working on a few things," he said. "I've never been in a situation like this before where we have so many people alike in what they can do. I hope we can make some moves because whomever we let go will play for somebody in the league this year."

Both Shue and Ferry are reluctant to talk about who they'll keep, but they have indicated there is no room for both Porter and Lucas.

"We'll probably go down to the last day before doing anything," said Shue. "I'm nowhere close to making a decision on Porter and Lucas. Their contract situations could have something to do with the final decision; at least it's an important concern."

Lucas has one guaranteed year left on a five-year $300,0000 a year contract he signed before last season. Porter is in the third year of a five-year contract believed to be valued at approximately $200,000 a year, but only a portion of it is guaranteed this season.

The most pleasant development of camp for the Bullets has been the rapid development of Warrick, the team's top draft pick. With Grevey sidelined indefinitely, the starting guard spot opposite Johnson was wide open and Warrick grabbed it, beating out Collins, Bates and Witts.

By playing Johnson and Warrick together, the Bullets are able to abandon the conventional point guard-shooting guard designations because both Johnson and Warrick are shooters and playmakers. All of the other Bullet guards specialize in one or the other.

"We went into the draft looking for a player to fit in with Frank," said Shue. "Frank needed someone big to play with him and someone who could make certain passes."

The most glaring need going into training camp was a big scorer off the bench. Enter Bates, signed as a free agent after being released by the Portland Trail Blazers.

"Billy has really done well," said Shue. "When he first came here I was really hot and cold on him. He didn't know what to do on defense. He still loses his man sometimes, but he hasn't been a liability on defense and he tries awfully hard. His offense is there."

Shue said he feels Boston "will be the team to beat in the Eastern Conference, and the other contenders will probably keep knocking each other off. Milwaukee will be right up there, too, but I'm still not convinced Philadelphia with Moses (Malone) will work all that well.

"The teams we really have to watch, though, are Atlanta, New Jersey, New York, Detroit and Chicago," Shue said. "They are all better. The Knicks, with Bernard King and Louis Orr and Truck (Robinson), will really be tough. We just have to hope they get off to a slow start while they get used to (Coach) Hubie (Brown) and each other."

Of the Bullets: "We aren't a strong rebounding team and we aren't a powerful offensive team, but we're going to play hard every night and teams are going to respect us."