I love my netbook, but unfortunately it can struggle to perform under a heavy load. Changing windows, moving the mouse etc can have considerable lag. If I set the nice value on Xorg to default to something with a higher priority, will I expect an increase in responsiveness from the user interface in general? Are there any disadvantages in increasing the priority of Xorg?
It might help some, but will be limited by what needs to run when you e.g. change focus. Running something heavy like Compiz will cost you quite a lot in terms of performance, because almost every screen update gets redirected through it by the nature of compositing. The fancy 3D animated cursors used by Gnome and KDE are also much slower than native X11 bitmap cursors.
If you're running a desktop environment, consider switching to a very lightweight one such as LXDE or ditching it entirely in favor of a minimal window manager such as fluxbox or xmonad. This will both improve performance and reduce memory usage.