The more memory you have, the more a game like Unreal, Quake can use for textures. It will preload all the textures it needs into memory, instead of swapping back and forth to disk.
You can easily set the amount of Cache that Win98 uses for the disk cache. TweakAll is one program that allows you to change the cache amount. On my computer, the max setting was set to unlimited, meaning it would eagerly chomp away your memory, if it wanted to. I changed the min/max settings to a nice 6MB size each, and performance is so much better, and I have regained a lot of free memory.
IMO, as a programmer, you can never have enough memory. I have 128mb, P3 and Geforce 64MB, and games still swap in and out from memory. My friend has a similar setup, but with 256mb, and there is very little swapping and a lot smoother gameplay. If prices stay low, in my next system I'm going to fill it with 512mb.
In one of my programming classes, I asked someone how much memory he had, and he said 32mb running Win95!!! What I don't get is all of those people that still have 32mb!!! How can they run anything? Talk about some major disk thrashing going on!