It hasn't really mattered since BBs got bumped up to 512MB. I never get anymore memory leaks or slowdowns due to lack of memory.
Of course, this is all contingent on the amount and the types of apps you have. If you have a lot of poorly coded apps installed that drain your memory, then you may find it necessary to shrink the OS. Cases like this seem rare though.
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Performance-wise, I still shrink everything I can from my 9780. The less the processor has to deal with the better since pretty much everything is deeply integrated.
On a 1.2ghz processor thou... I am not sure what effect it will have. Might as well just free memory you'll not really use... Or allow for the sheer awesomeness of the OS to shine since it won't be handling stuff you never trully use.
