Right off, I would say double your RAM. 5 years ago, 512 MB was enough. But as programs such as Acrobat, Antivirus, and others evolved - and expected your computer to evolve - they used more and more RAM. In the Antivirus arena, low resource utilization has been attempted, but its still not great. In the end, today, I would recommend 1 GB as the minimum RAM and depending on what you do with the computer, 2-3 GB. 4 GB is the theoretical maximum, but due to some technology limitations, it's not uncommon for systems to max out between 2.75 GB and 3.5 GB, so going much beyond 3 GB doesn't generally make economic sense.
Addressing some of the points made by others, Defraging is not likely to produce a noticeable increase in performance for MOST things. If you work with LARGE files often, then those files CAN be accessed noticeably faster - so I WOULD do a defrag, but don't expect the system to suddenly speed up - the improvement will likely be too little to notice.
While switching off unnecessary services CAN help performance, if you have enough RAM, the biggest help it will be is to your startup times. otherwise, disabling some services and third party programs likely won't produce much of a difference. The CPU - if you look in task manager - is probably sitting around 5%... almost certainly not more than 15% for any significant time. That means that, at worst, the CPU itself is sitting there with nothing to do for 85% of the time (at least most of the time). So CPU should not be your problem unless your trying to edit videos or something otherwise processor intensive (basic e-mail, web browsing, document writing is NOT processor intensive - though watching flash videos can be (thank you adobe!)).
Someone asked HOW it was slow - that's an EXCELLENT question - if it's slow browsing the web, it COULD be because you may have many helper applications loading in some way - perhaps a McAfee Web-site check or other web site authentication program that validates the site your visiting as being legitimate and clean from viruses.
And I agree with the responder who said check for malicious software - I like Malware Bytes and VIPRE antivirus to check on things. Just keep in mind, NOTHING is great today... 10 years ago, Antivirus software had a 99% success rate (or so I'd estimate). Today, it's 80%... and that's just at determining you're infected, forget about cleaning - the rate is lower. Sure, it varies by product by in my opinion (and review sites not withstanding), it doesn't vary by more than 2% or 3% above or below 80%.
As noted, a clean, FRESH installation can be beneficial as well. But this can also be painful and time consuming if you're not comfortable with the concept. IF you wanted to do this, I would swap out your current hard drive with a new drive (or if nothing was on it, the old new drive) and install Windows cleanly on that. You can then get a $15 enclosure and turn your old hard drive into an external drive. (BTW, I would still get the RAM upgrade).
Finally, consider if you are willing to spend $200 on parts, a low end new computer this time of year (without monitor) can cost you about that... maybe $300. Yes, you'll have to take time to migrate your documents and programs, but it's a clean, new, faster system.
1I say upgrade and save the planet! Too much e waste being produced already, =) – Enrico Susatyo – 2010-12-03T23:35:20.573