That's RAM.
RAM is hardware. The physical memory cards you have inside your box. You
increase it by buying more of the same type and inserting it into
available slots on the motherboard.
Don't be too quick to do it, however. Despite those who tell you that
512MB is better than 256MB (which you have). it is *not* true for
everyone. This is *not* a one-size-fits-all situation. You get good
performance if the amount of RAM you have keeps you from using the page
file, and that depends on what apps you run. Most people running a typical
range of business applications find that somewhere around 256-384MB works
well, others need 512MB. Almost anyone will see poor performance with less
than 256MB. Some people, particularly those doing things like editing
large photographic images, can see a performance boost by adding even more
than 512MB--sometimes much more.
If you are currently using the page file significantly, more memory will
decrease or eliminate that usage, and improve your performance. If you are
not using the page file significantly, more memory will do nothing for
you. Go to
http://billsway.com/notes_public/winxp_tweaks/ and download
WinXP-2K_Pagefile.zip and monitor your pagefile usage. That should give
you a good idea of whether more memory can help, and if so, how much more.