I have Vista on my laptop (C2D, 1 GB, GMA950) and no problems so far. Everything I use work fine (including Photoshop). Even Aero is perfectly fine even though I'm using really crappy integrated graphics. So no, it doens't take a super high-end machine to run Vista in all its glory.

Also, it's not a memory hog. It's just SuperFetch precaching your programs. If it was really the OS taking up all your memory then you'd experience severe slowdowns whenever you open new programs, but I'm sure that's not the case, right? And don't even both with ReadyBoost, it doesn't do much unless you're starving for memory (256/512).