I don't run many intensive programs besides PhotoShop, but I play a lot of games. And I just upgraded from 512 mb to a gig of ram, and it make a tremendous amount of difference in how fast games load, and unload. Before, when I quit a game it took probably 30 seconds before I could access anything on my comoputer, now it's immediate. Game play also seems to be a lot smoother also, although I'm not sure this is due to the added ram. And virtual memory is hardly used any more.
I'd highly recommend that you at least go to 512 mb of ram. And you can get two sticks of 512 mb of PC3200 value ram at NewEgg.com for not much over a $100 if the budget is tight.