Most computer-savvy folks consider the answer to the above question to be simply "More." Common wisdom says the more RAM in a PC, the better it will perform.
But as cheap as memory is, loading up on it can still stress a budget. Tom's Hardware has a typically thorough article showing just how much memory you really need, based on your usage.
Writers Jon Kullberg and Patrick Schmid combined benchmarks and file-transfer tests to show what happens when you take the real speed killer -- hard disk access -- out of the equation. They use popular games for benchmarking -- Quake 4, Doom 3, Far Cry, etc. -- to make their point.
Their conclusions are here. The executive summary: 512 MB is the bare minimum, really good only for those who don't ask their Windows XP computers to multitask. A gigabyte of RAM is the sweet spot, the optimum amount for most users. And 2 GB is recommended for gamers and power users.
I recently bumped my system up to 2 GB, and I'll agree with their findings. I think I'll also tweak my recommended PC specs pages to reflect this, as well.
Updated: I made the changes to my PC Specs pages, and here are my new minimum recommendations for desktop system memory:
• Budget/novices -- Still 512 MB, but get a gigabyte if it's within your budget.