Everything about your set up looks pretty great, except for the RAM. You should probably have about 4GB to work at maximum efficiency in AE, and even more if you’re going to upgrade to CS3.
AE is able to use up to 2GB of RAM in Windows (or 3GB if the right switch in your boot.ini file is on, or if you’re on Mac OS X).
Generally the OS will want to use around 1GB of RAM or so for its own purposes, meaning that if you want to have any other applications open while you work in AE it’s a good idea to have around 4GB of RAM.
This changes slightly with CS3 because CS3 is able to create multiple instances of AE using the processing power of separate processors/cores in your system, so with CS3 the best you can do is to have 4GB per-core (although I think with a 2 core system 6GB should be plenty).
Darby Edelen
DVD Menu Artist
Left Coast Digital
Aptos, CA