I use a Mac Pro with dual 2.4 Ghz quad-core Xeon processors. The machine has 6 GB of DDR2-667 RAM and two 500 GB drives in RAID 0. I am running OSX Snow Leopard because newer versions of OSX are not compatible with my hardware. I very often need to have 10 or more programs open at one time. As an example, I might run Photoshop, InDesign, Microsoft Word, Excel, a Bible software program, Outlook, two web browsers (Safari and Firefox), a Windows 7 virtual PC using VMWare Fusion, Acrobat Pro with Pitstop, Flightcheck, and Calibre. In addition, Time Machine runs periodic backup as I work. The machine runs very slowly with all this going on at once, but I am constantly going from one program to another, so closing APPs as I go and reopening each one again as needed is not an option. I can upgrade to 12 GB total RAM for $180 or to 20 GB of RAM for $380. Other than one bad ethernet port the hardware is in perfect working condition, so I hate to purchase a new machine if the one I have can be upgraded to solve the problem. And now my question: Do you think upgrading the RAM to 12 GB or 20 GB would have significant impact on performance in my situation, or is upgrading to a newer machine the only option to improve performance?
Holy smokes, even without any quantitative analysis I can tell you that you're running just about all your machine can handle. Your processor is just not strong enough to smoothly manage this level of activity, and more RAM won't help significantly.
I would recommend buying a second computer with a stronger, multi-core processor (3.0+ ghz with at least 4 cores) and 8-16GB DDR3 RAM. As long as you don't buy another macbook, you can actually get a desktop rig like that for about $450-650 (cost of monitor not included). Investigate your options on newegg - they tend to have decent deals.
You're probably causing your o/s to swap memory to disk given you have some very memory hungry applications running all the time. This will probably be easy to see by looking at your hard disk activity light when you change applications.
Firstly, check to see if this is the problem (Activity Monitor). If so, there are 2 things you can do. 1) Increase RAM so you can fit more applications in memory at the same time without having to swap them to disk. 2) Get a faster drive - maybe an SSD if you can stretch to that.
The CPU is fine providing you're not actually processing much simultaneously. Just because the apps are loaded into memory does not mean they're consuming large amounts of CPU. Only when they're asked to perform work will then get CPU greedy. Of course, if you do need to execute many tasks in parallel (i.e. server type work) then a newer CPU would benefit, but in this example, I think larger gains could be had by upping the RAM. Ask your retailer if you can 'try before you buy' ?
Well, I definitely agree with @JourneymanGeek that the current processor is fine and there is no point of replacing it... the issue here is the RAM. Normally, when you use Adobe PS atleast 8GB is required (that's just my opinion for better performance) coupled with all the multitasking you been doing, atleast 12GB or above memory is required. Usually, 12GB should do the necessary work but 16GB is always the better option. Also, sometimes browsers can drain too much memory due to the installed add-ons and plugins etc. So IMO, go with a 16GB of memory upgrade (assuming this is your system - http://support.apple.com/kb/SP30) and that is the max you can upgrade your RAM to. More often instead of contemplating on getting a new system you will be amazed by the performance you can get just by upgrading your RAM.
Hope that helps.
Your best option IMO is to move to SSD's. Do you need all 500gb for operations, or is most of it for storage? A raid 0 with two SSD's Crucial.com will give your PC the bigger kick. This will make your PC use less RAM as your SSD's will be as fast or nearly as fast as your RAM.