Okay, technically, they are different. It is the Virtual Memory that gets placed in the paging file. However, for this topic, I would think it is safe to say that they are almost one in the same. An in-depth explanation for this question is a little too much man. In fact, Windows refers to it as "virtual memory paging file". So, try not to confuse people when there is no need to with uneeded information.
On to the orginal question now. If you have 512 MB of memory, I would set the paging file for 768 MB minimum and 768 maximum. And if at all possible, find an old drive, and put the paging file on that drive. Set it for the 768/768 size as stated above, and that will get you the best performance possible. If you have a disk defragger/utility that allows you to place the location of the the paging file at the beginning of the drive to improve performance, by all means, do it. But for Pete's sake, keep it off the drive/partition that the OS is on. That my friend will definetly make a difference. That is what I did for years until I moved up to 1 GB of memory. I never had any problems, no thrashing, and never ran out of memory. Whatever one does, try not to let windows manage it. It is just one more thing that you can keep the CPU from having to do. In my opinion, the less the CPU has to do for housework, the more perfromance you are going to get out of the system. Just think, if your wife (or husband depending on the family) didn't have to do the housework, or at least had it reduced a bit, how much more time (and energy) would they have at the end of the day for other "task intensive" duties... ;-)