first off, don't think your laptop is letting you down. You've got decent hardware there, so I think your problem is just getting it optimized to where it's working right. I'll walk you through it, just follow it in order, so everything works out optimally.
First thing, I would go through your control panel to "add or remove programs"
look through the looong list of things that will pop up, and think about whether you actually use these programs or not. If not, uninstall them. You'd be surprised how many of these programs run something in the background that takes up some of your RAM. For example, things like Adobe programs tend to have an updater running in the background without you even knowing it. Many computers come with "bloatware" that is simply unneccessary, so get rid of it! There's no need for things like "dell driver updater" or "HP photosmart suite"
after you've done all that, I'd recommend doing a disk cleanup, then a disk Defragment. Click start, go to accessories -> System Tools and you'll find both of those right there.
Now, go ahead and open Start, click "RUN"
type "msconfig.exe" into the box, and a little built-in windows utility will pop up. When you click the "startup" tab on the top, it will come up with a list of programs that automatically start up with Windows, and continue to run in the background(once again, these use up RAM)
Drag the boxes out so that you can read what these programs are, and then disable the ones that you don't need. You dont need Adobe acrobat on startup. You dont need MSN messenger on startup. You don't need skype on startup, either. Disable them! if you want to use these programs, you can start them yourself!
Once you're done, go ahead and exit the utility, and proceed to restart.
Now, do some browsing around the internet, and check all of your drivers. If something needs to be updated, go ahead and update it. you'd be surprised how updating your drivers can make things run better. Take your time, do your research on your hardware, and find the latest drivers for everything.
Hopefully after all this, your laptop should be running pretty good. My only other suggestion would be to start fresh, and simply format your drives/re-install windows.
Now, if you want to upgrade your laptop's hardware, the first place I would look is at your hard drive. Mechanical drives are great, and very sufficient for most users. But if you're looking for raw speed all-around, you'd be best off by upgrading to a SSD. With a SSD, your laptop will feel like a completely different animal....it's really quite amazing what the difference is. I recommend, if you do buy one, to buy a SATA-3 SSD.Sata-3 is the fastest interface for any hard drive currently. Even if your laptop uses a SATA-2 interface, they're backwards compatible. When you buy a laptop later on that uses SATA-3, you can simply drop it in. A Sata-2 SSD will still be tremendously faster than your mechanical drive.
If you have questions, just go ahead and PM me, I'll be happy to walk you through any of this or answer any questions. Hardware or software, I'm here to help.