the main reason is that all applications (programs) running on the PC use up RAM (memory) and the more memory you have the more programs you can have open. It also means that the computer will not 'hang' (freeze) whilst one process is working.
Windows Vista using its highest spec settings takes up a high amount of memory now and 1GB will just about cope with it so increasing the amount of memory will allow the user to have this and other software running.
yes. the dual core processor just enables two calculations to be processed 'at the same time' thereby adding a performance increase. even with the latest processors they are still dependant on the amount of RAM that can temporarily store the information that it needs to process the calculation.
it is generally considered that the cheapest way to improve performance (even if only slightly) to a PC is to add/replace the memory cards in the PC. a new processor will help but these are usually more expensive than memory cards and more tricky to fit.
>Why would anybody wish to increase the computer >memory from 1 Gb?
Remember that not all computers are home computers, thousands are used in business or as servers.
While for home use 1Gb or 2Gb is probably enough for a business or a server you may want 10Gb or 100Gb or more.
In fact for computers that calculate the weather or other large projects you can have thousands of computers all joined together that may use many hundreds of gigabytes of memory.