I have a very similar setup, with the same processor and 1GB RAM (soon to be 4GB).
I have larger hard drives (over 1 terabyte - three 400GB drives), but that really does not matter.
RAM is everything from what I understand. The more RAM, the larger samples and projects - regardless of disk streaming - so install as much as you can afford or that the motherboard allows.
In FL Studio 6 Producer, I have been able to choke it after about 16 virtual instruments / samplers going (I have, among other things, emu proteus sampler, kontakt 2, Stormdrums, EWQLO Silver (at the moment - but about to purchase Emerald) and tons and tons of vsti instruments, my favorites (purchased) being Wusik, M42 Nebula, Superwave Pro/Trance, Real Guitar, Manystation, Manyguitar, The Second Wave, Vox'd, (and freebies) Crystal, Motion28, EVM synths, string synth, superwave p8 and a ton more) with audio fx on several channels, forcing me to render and bounce, so to speak.
However, in Sonar 5 Producer, I have been able to get far more tracks with instruments before I begin to use the FREEZE feature. The FREEZE feature is a life saver, I must tell you. Armed with that, it really does not matter how much memory you have because it renders to wave for each frozen track and then you can work on the next. If you need to edit, just unfreeze the track and make your changes. Simply fantastic!
Therefore, I believe it matters which HOST you use as well. Some are simply more efficient than others. I guess trial and error will help you the most.