I personally would not even try to run Xp and a program as "large" as PE
XP being a 32-bit OS will only utilze a max of 3 gig of ram.
This will be split with the OS using 1 gig and and 2 gig for applications.
Taking a 1 gig laptop to 2 gig will show a slight improvement as the OS will swap less to disk, and a little more Ram will be available for the application(s). You will also see a slight bump if you multi-task app's.
In all honesty you won't see a dramatic improvement, but if the cost is reasonable, even a small bump in the night is sometimes worth the effort.
You might be better served by saving up your dollars and investing in a high end tower built specifically for video editing...
Personally, and not to diminish any other comments, I would bump the RAM up to 4GB, if your MoBo will allow it. Yes, you will not be able to fully utilize the full 4GB, but can run the 3GB switch from boot, to get more of it available to programs and a touch more for the OS. The reason that I would go with 4GB is that most MoBo's want an even number of sticks, so 4x1GB would be my choice. RAM is very inexpensive now, even if you have to buy from Dell. I'd make sure to get RAM sticks that are matched in every possible way.
Crucial Technologies has a utility on their Web site, that will monitor you computer and tell you what is available for it, in the way of RAM. I also believe that Dell has a series of charts for all of their models and the possible RAM configurations.
FWIW, I run both PE4 and PrPro2 on a laptop with XP-Pro SP-3 and 4GB RAM. Probably the biggest difference is that my laptop has 3 x 200GB 7200RPM SATA II HDD's. I doubt that your Dell will allow for more than one HDD, though I could be wrong.
For me, an NLE computer is built around the following:
1.) CPU - important, especially for Rendering
2.) RAM - important for both running the program and especially for multi-tasking
3.) I/O sub-system, i.e. HDD's - extremely important for all aspects of editing
4.) GPU - not that important, so long as it will display and has good driver support (this last is very important)
Just my feelings,
Right on topic, since I recently upgraded my (summer of 2004) home workstation PC to 4 GIGs of RAM. I only had 1 GIG for years while running Win XP (now at SP3). Though, I basically bought ALL NEW RAM and dumped the old GIG. Works like charm and my whole machine is like a new computer. Even Office 2007 Pro rolls along! My CPU is an Intel Pent. 4 2.8 GHz.
I also have an ATI All-in-Wonder 9600 (128meg) video card. I have two 7200 HDs. I often record music to hard disk so having two hard drives is key (like it is for video production). I also have an Audigy soundcard.
I have no idea about laptops but my "older" machine is almost like new with the 4 GIGs. Though, I had this PC custom built beyond the requirements of 2004. That's why it's still alive and kicking!
PS: Software used on a regular basis: PE7, Photoshop CS2, Sonar 6, Finale 2008, Sibelius 6, Roxio 9, FrontPage 2003, Asteriods Deluxe! hehe