Something is definitely not right with that Activity Monitor. That's off a restart in a new user?
The frog icon, if I recall, represents Vuze which is a file-sharing client. Clearly it went to launch and got hung and then started chewing up your system resources. From a restart, no startup items, on a MacBook Air with 2.0GB of RAM I'm at almost 75% green in that same pie chart. With over 50% of your available RAM being consumed, and maybe 5% available it's very clear why you're having performance issues.
No, more RAM is not the fix, identifying what's causing all of yours to become "in use" is the first step. If we startup a new user, with nothing set to be in startup items and no applications running but Finder & Activity Monitor, what does that pie chart look like?