I also have 512 MB RAM and find performance can become sluggish if just a few too many applications are left open. Closing unused apps to reclaim memory space is a reasonable way to maintain performance. Of course, rebooting will give you back the most space possible...
From the Help file of Memory Usage Getter, by Simone Manganelli:
"Memory Usage in Mac OS X
With UNIX underneath the user interface, we now have a Macintosh operating system that has a very modern and very efficient memory management system.
No longer do we have to manually assign the amount of memory we want to assign to a specific application. Mac OS X's memory management system dynamically assigns memory to applications, so if an application needs more memory to perform intensive tasks, Mac OS X will automatically assign it more memory (without having to relaunch the application). The effect? No more applications complaining about the lack of memory, and no more "Out of Memory" errors.
In addition, if a computer doesn't have enough physical memory for an application, Mac OS X will automatically switch to virtual memory, allowing the application to rely on disk space for its memory. This, of course, makes the application run much more slowly, but this feature of Mac OS X eliminates the need to manually turn on virtual memory. The amount of disk space used for virtual memory also is dynamically assigned based on the needs of open applications.
Another benefit of Mac OS X is the fact that there is no requirement for a contiguous block of memory. Mac OS X therefore can use all of the available physical memory for an application before resorting to virtual memory. Furthermore, memory assigned to each application is protected from other memory segments, preventing application crashes from totally taking down the system.
With these features, Mac OS X provides a much more stable and much more efficient operating system.
However, it should be noted that Mac OS X's memory management system is not without its downsides. The biggest change from Mac OS 9 to Mac OS X is that the system and its applications use up a LOT more memory. Mac OS X's system requirements state that it needs 128 MB of RAM, but many people recommend a minimum of 512 MB for Mac OS X to run acceptably. This amount is subjective, but one thing is for sure: the more RAM that is made available to Mac OS X, the faster it runs.
Also, Mac OS X tends to eat up all available memory, even if there is a lot of it available. This is because Mac OS X caches as much data as it can in memory, so that it can potentially reuse that data without having to re-cache it (the UNIX term for caching data in memory is "paging in" memory). Mac OS X's performance drops when all available memory is used, because it has to start removing things from memory ("paging out"), which has a performance hit. This problem is much more prevalent in Mac OS X because applications are not limited to a specific amount of memory; they just take as much as they need, so free memory dwindles fast."
M.U.G. has pretty much been incorporated into Activity Viewer in Panther. There is additional info in the FAQs:
http://tinyurl.com/235rw