The old 2.5 x RAM rule does not apply any more. If you have 256 or more, you won't need anything like 2.5 times that.
Bottom line is you rarely need more than about 300 megs. Once you reach that number, the 2.5 rule isn't valid anymore. I am running 350min 350 max on my machine with 256 Megs of RAM and it works fine. 500 megs is normally overkill. Having too much swap space is not a big deal, but the OS does have to manage and track the extra space, so don't go nuts with it. Somewhere between 250 and 500 is fine.
BTW, be sure to keep your swap on your fastest hard drive. If you have two physical drives that are both fast ones, put the swap file on the opposite one to your OS itself to improve performance. Always defrag your hard drive completely before you move or change your swap file. Just to be safe, do it again after you change it.
