i have heard the page file has other purposes beside provided extra VM, and helps the issue of RAM fragmentation
It depends on the VM implementation, but using a pagefile to move stuff out of main memory to get bigger, free contiguous blocks isn't bad idea except for the disk churning you'd notice.
Why not just disable VM all together instead (aside from the reason i just mentioned)? I have a gig of RAM trying to figure what to do.
You can't disable VM, any modern OS is tied to it too closely. You could try to disable the pagefile tough but MS' VM requires a pagefile. NT 4 doesn't boot without one, Win2K and XP both create a variable size one if you boot without it setup. You can't get around it.
You could run Linux or a BSD and run with no swap space, but that's not recommended either.