Your i5 2500 is very possibly a significant bottleneck, and very possibly more so than the 8GB of RAM.
Upgrading to a i7 2600k would give you twice the effective cores (adds hyperthreaded "cores") for processing and speed up lots of aspects of CS5 or CS5.5 (assuming you have one or the other).
Increasing from 8GB of RAM to 16GB of RAM would help a bit, probably mostly with rendering once a project is completed. That is helpful, but I suspect that you are suffering with just normal use of 1080P on the timeline and with timeline rendering with your current setup.
You can use task manager to see where your bottlenecks are; if the CPU usage history shows that you are using 95+ percent of your 4 cores for those times when you feel that performance is lacking, then CPU horsepower is likely your most critical bottleneck.
Regarding your big deadline, you can purchase additional drives and simply share the load (i.e. projects on one, media cache and media cache db on another, scratch files on still another) to gain performance right away; then, after your project is complete, you can configure the new drives as RAID 0 and have Premiere rebuild the cache and scratch files on the new RAID 0 array.
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First of all, you don't "need" a RAID, but rather you need to have separate disks. You can always have a RAID later, but for now, you need to distribute your load. If you only have one hard drive for everything, that is your biggest bottleneck. More so then the 8GB. You're better to have a smaller (500GB'ish, or less) HDD for your OS and programs, a big drive (2TB) for your project and media, and another (maybe 1TB) for your cache and previews (and possibly pagefile). As for RAM, more is always better, and not expensive. Will more RAM improve performance? yes! Will getting 1600 vs 1333 be way better? not necessarily. If the motherboard easily allow you to go 1600, and the RAM price is not that much more, then by all means, go for it.
thanks for the quick replies guys!
i'm definitely going to pop in another hard drive, because it looks like you both agree that thats my biggest problem. its great to know that i dont have to do the raid set up for faster hard drive reads.
when i finish the project il upgrade the ram.
il wait until ivy bridge to upgrade my processor though.
thanks again for the info!
I agree, Jim, that the i5-2500 is fairly restrictive in terms of performance. At best, it is competitive only with the low end of the first-generation LGA 1366 i7 CPUs (i7-920 or i7-930) when it comes to performance in CS5.x with the CPUs all running at their stock speeds. But the i5-2500 (non-K) could not be overclocked to the same degree that the i7-920 or 930 could.