some programs require a swap file....
Not sure why, but some windows xp installs freak out when you take out the swap file, even with 1.5+ gb of ram.

So I merely set mine down to 128mb, and it can expand a little higher than that.

2gb ram here.

If you have more than/equal to 1gig and aren't running latest cutting-edge graphics design or games, you can start to play with the swap file and reduce its size or try to eliminate it altogether.
The swap file I think was said to be about 10x slower than real RAM.