I see it for a split second when opening any Office Mac 08 app like Excel or Word.
All apps will use a little more RAM when starting. It's what happens after everything "settles down" that will matter. If you still have only a few MB of RAM left after Word, opens, then yes, you need more RAM.
(Groan) I may have to save in order to switch to a core i5 or i7.
Activity Monitor will also tell you how much CPU usage. If you low percentages (well below 50%,) then the CPU might not help either. Arguably, the most important thing for a CPU is the cache. For most people, that gets more bang for the buck than say MHz. And apps like Word won't gain anything with more cores. So on your next computer, check the specs for the CPU cache.
Because you have a laptop rather than a desktop, I'd suspect that you'd actually get a more noticeable improvement with a faster hard drive. And if the hard drive is "spun down" to improve battery life, then of course, that will take a few seconds to get the drive up to speed, which would obviously cause a "beachball".
Me personally, I ordered my Macbook Pro with a 7200RPM drive instead of the normal 5400RPM drive. I knew I needed disk performance. But I had to sacrifice battery life. I tend to only get around 3 hrs of battery life in my normal usage pattern. So it means I'm tied to a power outlet. but it also means that I can configure the MBP to not spin down the hard drive either, thus reducing the chance of beachballs.
If you have the money, you may even want to consider a SSD, which is even faster than a 7200RPM drive. But anything beyond 120GB is quite pricey. (Me personally, I got a Seagate hybrid drive that has more cache RAM than a typical drive.) YMMV, of course, so what I do might not be practical for you. Just some thoughts anyway.