Having the correct hardware is very important, without the correct hardware or a certain amount of ram you may run into problems when trying to run software. Software cannot run without the hardware which is why hardware can cost more than the Software.
When buying or upgrading a computer you really need to think about what you need it for, if it is for word processing only then you will not need the best hardware, if you need it for gaming or 3D Design packages then you may need to get some of the best hardware available. For example Adobe Photoshop requires much more ram than Microsoft Word.
These days you can get top of the range processors for a great price, processors used to just run on one core but the latest processors are running on 2 cores, this is essentially double the speed and performance of previous processors, Duel Core processors are by far way better performance and speed for the cost. For the price you pay for a Duel Core processor you may as well fork out a few extra pounds to get one, it will benefit you in the long run as you should not need to upgrade or buy a new computer for a long time depending on exactly what you are using the computer for. If you multi-task a lot then you should defiantly get a Duel Core processor, the latest Core2Duo processors from Microsoft are great performance and speed for the price you pay.
Say some software needs 512mb ram to run and you had 512mb ram in your system this means it will run the software but at the bare minimal only and if you try to open anything else with that software open you will notice your computer reduce in speed, no doubt about it. When buying hardware it is important to write a list of what you will be using the Computer for, this will help determine how much ram you need and other things such as processor speed.
If you are into gaming then your computer will need to be a top of the range spec. You will need a duel core processor for definite and a lot of ram, possibly a big hard drive if you are a serious gamer. You will defiantly need a good graphics card, you can get the latest graphic cards for great prices, they will run most games at max graphics and performance, the more you pay for a graphics card the better it is going to be.