RAM is a wonderful thing. No matter how fast the processor, how large the hard drive, how sophisticated the video card, without plenty of RAM, any computer will run like molasses. I speak from personal experience. My first RAM starved system was my P1 200. It had the odd configuration of 2x8mb SIMMS and 2x4MB SIMMS for a total of 24MBs. At the time, the most common total was 32MB preferably 64. The RAM wasn't a HUGE bottleneck for the system. This was due to the fact that it wasn't called upon to do anything strenuous. My main uses for the system were word processing , occasional gaming, and BBSs (this was before the time of the internet). To this day, that system still has the same RAM, and it feels just as slow. My next system came with 128MB of RAM. It was a P3 733. At the time 128MB was a little on the low side, but still acceptable. Running Windows ME was fine with this much RAM, as long as you only ran one or two programs at once. Any more than that bogged the system down immensely. After I upgraded the OS to XP, 128MB of ram was just not enough. Things felt sluggish, even when no programs were running. After I upgraded the RAM to 384 (added another 256 DIMM), the performance gain was immediately apperant. Windows loaded quicker, switching between applications was almost instantaneous. To this day, the only system I own that isn't RAM starved is my laptop. 640MB of RAM was a huge jump from the original 256, especially in OSX.
My sister's 1800+ has 768MB of RAM, and it seemingly can encode two times as fast as my 1.2ghz Athlon. The mhz difference is only about 300mhz, but she has over twice as much RAM. Of course the fact that her ram is twice as fast (DDR33 vs PC133) might also have something to do with it.
In terms of performance per dollar, RAM is the clear cut bang for your buck winner. Unfortunately it's also the component people are most likely to skimp on. Most new dell or Apple systems come with a paltry 256MB of RAM. While most modern OS' will run with that much RAM, it won't be a great experience.
Another misconception people seem to have about ram is that the older it is, the lower the price will get. This is NOT TRUE, which I found out the hard way. After a certain point, usually when the newer standard is released, RAM stops dropping in price. There becomes an equilibrium point where demand has fallen enough that manufacturers move on to the next standard. When that happens, prices start to rise again. This phenomenon has happened time and time again. If you check current prices of EDO, PC100 and PC133 RAM, you'll find that they actually cost more now than when they were popular. In fact the price of a 512 stick of PC133 is the more than the price of a 512 stick of PC3200 ram. It's gotten to the point where if you're running a system that uses PC133 ram, and you need more memory, it is more cost-effective to replace the motherboard and proc and buy the newer ram than to buy the old ram. Long story short, get more RAM when it's popular.
There's no such thing as too much RAM.