In Windows XP you have two sources of memory:

1.) Physical RAM: It's the sticks of memory you insert into your computer.

2.) Virtual Memory: Also known as a swap file or paging file, it's a file on your computer's hard drive that acts like RAM. It can pick up the slack when there is a lack of RAM, usually holding data that is accessed less often. The downside is that it's incredibly slow compared to RAM, resulting in a drop in performance the more it must be used. In addition, Windows and various software may refuse to install or run if you do not have enough physical RAM.

Now, with the new ReadyBoost technology in Windows Vista and Windows 7 you have a third option...flash memory. (Including USB 2.0 flash drives and memory cards such as SD, CF, etc.) It's considered the middle of the road option because it is still slower than physical RAM but at the same time usually much faster than reading from and writing to the hard drive. It cannot be used as a complete substitute to physical RAM, but it can be used to give you a boost in speed over relying heavily on the paging file alone.

1.) Regardless of whether you use ReadyBoost or not, you still need at least 512MB RAM to run Windows 7 decently.
2.) ReadyBoost is an option on the AutoPlay menu whenever you insert a compatible device.
3.) ReadyBoost requires a freshly-formatted device with between 256MB and 4GB of space available.
4.) If ReadyBoost returns an error message stating that you cannot use it on that drive it typically means that either the drive or your computer does not support the transfer rates required by ReadyBoost.