Optimal System Hardware for CS3

My current setup is as follows:
Dell Optiplex 330
Intel Core 2 Duo E6320 Processor
4GB RAM
256mb ATi Raedon 2400 graphics card
Dual Monitors
I always have Illustrator and Photoshop CS3 along with Outlook 2007 running at all times. The system is really slow when moving images around, manipulating them, switching between apps, etc. The computer is clean of any viruses and spyware and clear of almost all programs in the system tray and startup.
Do I need to get a better processor, video card, or what do i need to keep the programs from lagging?
Thnaks!

Illustrator, through version 12 (CS2), has never had a user-adjustable memory usage setting.
I don't know about v13.
I would also pay attention to scratch disk settings (in both Photoshop and Illustrator). Ideally, you'll have ample scratch space on a fast physically separate internal (or eSATA) hard drive.
If you have everything set to factory defaults, you have the operating system page file and both Photoshop and Illustrator scratch files competing to write to the same space.

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