When I flew for almost 2.5 years on dial-up, I was on a Pentium 3 PC. I kept XP Pro "extremely Clean", with AH up I had 13 processes running. I downloaded SP2 and then reverted back to SP1 as I found SP2 added 3 or 4 processes (one of the few things I cannot remember exactly). I stopped downloading Torrents, Music, etc as I found it took almost 24 hours for the connection to "Stabilize".
I never had a single complaint of lag and ran a 1st Gen GeForce DDR-DVI and got 30-30fps in a large furball.