How do I know when I need more RAM?
As a general rule, if you look in Task Manager's Performance tab, you'll see a reference to the amount of unused physical memory. If this is less than 5mb, you're probably swapping considerably - installing more RAM into the box helps.
Swapfile recommendations
There's an old tech's tale that this should be 2.5 times physical memory. I personally don't share the view. Windows does a decent job of memory management these days, so it's recommendation is worth looking into. I would, however, settle for a fixed size swapfile, ideally on the fastest disk in the host.
Disk too slow?
Have a look at Perfmon's Average Disk Queue graph. If this is over 5 for sustained periods, either kill off the disk I/O intensive processes (Indexing Service is a good candidate) that you don't need or upgrade the disk to SCSI or SATA2 (with RAID5 if you can) if you want local storage, or NAS/SAN if you have attached storage handy.