Your performance will increase with more memory, going to 1024MBs of memory will help aplications and games. Depending on the games you play. The main thing to look at is your total package.
Depending on the quality of these items, I would upgrade accordingly. If you are getting lag on your games it could be the video card that is causing your system to bottleneck. What type of video card do you have? You can throw as much memory as you want in the computer and still have lag because the video card is inferior.
Hope this helps.
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