Back to the original question...
"Will more than 256mb slow down your computer?"
The older OSs did have problems with lots of memory. These large memory problems were most likely where the slow down rumors started in the first place.
Using Win2000 i have not noticed or heard of any slow down using more than 256mb of memory. Win98 i personally don't see a need to run more than 512mb for any reason, as Win98 was designed more for casual desktop use, and not for heavy load, graphics, video editing, etc use. MS has always had the NT product line for high memory, heavy load use.
Good Luck