After 512Mb of RAM, adding more RAM will start to slow down the computer. A simple way of thinking about it:
I disagree.
From
Tom's Hardware Guide
Top Performance with 1 GB of RAM or More
Another important performance criterion is the amount of RAM installed. Image and video-processing applications get an enormous boost from more memory. Readings taken with Content Creation Winstone prove that Windows 2000 and XP systems don't really take off until they have 1 GB or more of RAM. The benchmarks show how heavily system performance depends on the amount of memory. Indeed, 512-MB RAM is the bare minimum for fast Windows XP systems. Long gone are the days of Windows 98 and Me, when 512 MB was the most memory that the majority of systems needed.
The maximum amount of RAM depends solely on the motherboard and its chipset. For more information, go to the "Memory Support" table below. In x86 systems, however, the maximum memory allowed is 3.5 GB, no matter how much RAM has been installed. The CPU simply cannot address any more memory. The remaining capacity is reserved to control the PCI circuits.