Personally, I’d try and find a new desktop. It seems like it’s getting along in age, and it’s sorely lacking memory. Memory itself, however, is expensive, and doesn’t always solve all your problems. Besides, there are some good deals on desktops nowadays for less than $500.
Other than that, it’s possible there could be something else wrong with your computer. Hard for me to figure these things out without actually seeing it in action. Sounds like more memory certainly could help though, but the cost isn’t worth it compared to getting a new computer (in your case).
I know Best Buy has a deal going on right now where you can save some money off a new desktop and get a free upgrade to Windows 7 when it comes out. We’re picking one up tomorrow for about $400, since our old computer is starting to mess up internally and we’ve had it for about 5 years.