Originally Posted by LordOfLA 
Oh and it's just occured to me that XP users complain about XP keeping data out of RAM and then complaining that Vista keeps too much data in ram.... Hypocritical I think
Not really - people complain that XP pages to the hard drive, and the complaint here about Vista is that it's also putting data in the pagefile in the hard drive.
Funkster explains pre-caching pretty well. Basically the idea is that it's so quick to flush data from RAM you might as well fill it with things you might need, because loading things from the hard drive into RAM isn't as quick. If you need to put something else into RAM that isn't there then you just flush as much room as you need. Linux has been using a similar system for years.
Regarding page files, first thing to note is that 'page file usage' under task manager isn't quite accurate (under xp at least) - it's reporting the window of accessible memory that's being used - so this includes physical RAM as well. Actually separating out usage of the virtual memory on the hard drive is trickier. Secondly windows will always have some files paged to the hard drive - in Vista's case stuff it thinks it won't need immediately, but still wants to cache because it's quicker than searching the hard drive for the file.
What does this mean? Well because XP doesn't have this pre-caching ability (to the same extent at least) it tends to think stuff that's in RAM needs to stay in RAM, and it's a bit paranoid about keeping space in physical RAM so can be a bit virtual memory happy. There are some simple registry tweaks to adjust this behavior and indeed it's usually quite happy running without a specified page file as well. Now Vista with it's pre-caching has a different philosophy - flood the physical RAM and maybe use a bit of page file as well. However the consequences of doing so are not negative in Vista, as it's quite happy to chuck stuff out of physical RAM to make room for what you are running. End result - more stuff you're running will be running from physical RAM, and less stuff will need to be loaded up from the hard drive.