50 levels of undo might not take that much RAM, but if you use many layers (and I do advocate using more layers rather than more undo states for more flexibility and safety) than you would use up quite abit of RAM easily...
actually, laptops tend to be slower also because they run with lower memory and bus settings...but more memory does show up in more performance...might not be a directly proportional increase of performance but it is still there...and certainly you can't increase performance by changing the processor (well not unless you want to dig through the inards) so a memory upgrade would be the most feasible way to increase performance short of a new laptop...
as for Vista, which depending on which version you get allows for different amounts of memory, I would probably switch off all the bells and whistles cause I would mainly use Photoshop and webbrowser only...incidentally, my XP looks like Win98...