I'm playing on 512 with a dial-up connection (I usually only hit 33kbps) and thus far the game has been totally playable for me...
I customized the performance settings so that they're pretty well equivalent to the "high performance" option and I didn't experience any lag in the isle of refuge (I've gotten 2 characters to Qeynos, but haven't done much there yet) and nothing horrible thus far in Qeynos...
I messed around with the performance settings and set them on "high performance" and my machine couldn't do anything and even when I lowered the settings things were still laggy...I closed out and rebooted and everything was fine...
I'd recommend rebooting each time before you play...I don't know much about computers, but this seems to help...I think after being on for so long and running other programs you're RAM isn't running as efficiently as possible...
I've got 2.65 Ghz processor and a Geforce 4 ti 4200 card, so you may be experiencing problems other than just your RAM as well...