IPhoto is running VERY slowly, I often have to force quit.

Question

All other applications run normally and I am on a MacBook running 10.6.8. Using iPhoto '09 8.1.2  I have about 55 GB of pics. 

Answer 1

Well bearing in mind that the OS requires a minimum of 1 gig or RAM then yes, the amount of Ram left for applications is quite small, especially if you're have several running at once.
If that is the case, then yes, HD space becomes very significant, as it's used for Virtual Memory - and you have less than 10% of your HD available. What this means is that the OS now is looking through the disk for unused space to utilise as Virtual Memory, and as the disk is crowded, that takes more time.
The rule of thumb is usually that you would have a minimum of 10 gigs of Space or 10% of the HD free - whichever is the greater.
You'll see an improvement in  performance if you create more disk space and add Ram. I certainly would not let my available disk space get any smaller.
You can run iPhoto, iTunes and iMovie (the usual space hogs) from external disks formatted Mac OS Extended (Journaled)
The Cache is in your User/Library/Caches folder. Just drag the iPhoto folder therein to the trash. It'll be recreated next time you launch iPhoto.
Rebuilding:  Back Up and try rebuild the library: hold down the command and option (or alt) keys while launching iPhoto. Use the resulting dialogue to rebuild.
As always: Back Up First
Regards
TD