XP handles program priority dynamically. It automatically allocates resources to programs with equal priority based on activity and other considerations. The best approach for big applications is to leave them all at NORMAL priority, and let XP figure out who gets what and when. XP juggles RAM and other resources based on what each program asks for, how active it is, and also things like how often you switch from one program to another. But if you assign memory-hog programs to above normal priority, you can actually reduce total system performance since XP is less likely to "borrow" RAM from a high priority (but idle) program to allow running programs to go faster. The worst case is when two resource hungry programs both have high priority - they get in each other's way.

I've been running Photoshop and Poser at the same time. I've noticed that the program that is not running really has very little impact on the system performance, EXCEPT that when Photoshop is idle but contains a large image it can easily tie up 200+ megabytes of RAM. The RAM tied up by Photoshop can not be used by Poser, and vice-versa. So there's another reason for lots of RAM. There are exceptions of course, such as if you don't use a loaded program for a long time XP will finally stash that program's data to disc to free up some RAM for more active programs.