Eddie is largely correct, except this bit:
Originally Posted By: eddie1261
Bottom line is to buy as much RAM as your system will handle. XP will only address 3.7 gigs of RAM no matter how much you have in the box, but 7 or 8 will use whatever you give it. One of the HUGE improvements in 7.

The limitation is not so much XP as 32 compared to 64 bit - 64 bit XP will address the extra RAM just fine. 32 bit Win7 will not but 64 bit Win7 will, Win8 is ONLY 64 bit so that's fine.

I wouldn't be worried about the page file - most of the angst that exists about letting Windows manage page files is a hold over from Win 3.1 days when it didn't do it very well. These days Windows manages page files quite well all by itself.

The ONLY reason to interfere with page files is if you want to manage which drive it's on due to drive performance issues, otherwise just leave it alone - especially if YOU don't fully understand it.

However, something Eddie mention that I'd like to emphasize - stick as much RAM in the box as the OS will handle:
32bit XP and 32 bit Win7 = 4GB
64 bit XP, Win7 and Win8 = lots more - I'd stick in a minimum of 16 GB if the hardware will address it (some older motherboards won't address over 8 GB)

--=-- My credo: If it's worth doing, it's worth overdoing - just ask my missus, she'll tell ya laugh --=--
You're only paranoid if you're wrong!