Increasing RAM is the single most effective way to see improved performance.
This would help with gaming as well, though the other factor is the video card.
High end games try to take advantage on the "GPU" (Graphic Processing Unit), which acts similar to the CPU (Central Processing Unit) in your computer. This releases the CPU from having to process all video information, and makes the computer much more responsive.
The memory included on the video card is also a factor, due to the fact that your screen refreshes (redraws) its image many times per second (60 Hz = 60 refreshes per second - for example). The information for the change in on screen item locations is stored in memory, which is then accessed by the video card (adapter) to display the information. This is significantly improved if you have a large amount of memory to hold the information (basically like a buffer), and the inclusion of a GPU on the card can process this information without a read/write procedure through the CPU - which takes time.
Long story short:
For good game performance, you will want (1) Good video card, (2) Minimum of 128 MB memory on the video card, (3) 1 GB+ of RAM on the motherboard, and (4) Good cooling system.
Other considerations, though not critical, would be - a fast CPU, fast Front Side Bus.