How to know if you need more RAM
First, use your computer! Fire it up and launch all of the apps that you generally have going. Open a few browser tabs, get your email going, etc. Try to do an average session - don't open every app on your machine. In the example below, this is my laptop that's running Outlook, IE with several tabs, Chrome with several tabs, Notepad, Windows Explorer, a couple of chat apps, Dropbox and Snag-It.
Launch Task Manager (ctrl-alt-del & then 'start task manager'; OR right click task bar at the bottom of your screen and 'start task manager')
Switch to the 'Performance' tab
Click the 'Resource Monitor...' button at the bottom of the window, and it will pop up a window that looks like this.
There are 5 different sections of memory usage on the bar graph, but only 3 of them are really important to you.
First one (in grey) is hardware reserved - this is RAM that hardware uses & there's nothing you can do about this, so not important. This amount will generally be pretty low.
Third one (in orange) is 'Modified'. Also not very important because this amount is generally low, but this is RAM that's in use by low priority tasks that can be quickly released for other use.
The green section is important - this is the total amount of physical RAM that your machine is currently using (ignoring the swap file). In the graphic below, the machine is using 3GB of RAM.
The next important section is dark blue (labeled 'Standby') - this is actually not labeled well, as this is your free or available RAM. This is memory that's available for use by whatever application needs it next. In this example, there's 3GB of RAM just waiting to be used.
Finally, the light blue section labeled 'Free' - this is also kind of misleading, as this is more like wasted RAM, not free RAM. The memory in this section is the amount that Windows is just ignoring because it has no use for it. It's not being used & it's not ready to be used by anything - it's just sitting there doing nothing.
So, if someone were to show me this display & ask if they need more RAM I'd say no way, as a matter of fact you already have too much installed. I'm only actually using 3GB with another 3GB on standby and 2GB doing nothing at all. As it's running now, having 4GB in the machine would be fine, and having 6GB would give me a safety buffer. It's got 8GB installed (see the line highlighted in yellow), so I'm wasting 2GB because Windows simply has no use for it.