Holy cow yeah! That's what the system runs off of! You could have a 3.0 GHz CPU, but if you only had say 512 MB of RAM, it wouldn't be that fast. The RAM is what your OS loads onto off of the Hard Drive, and what programs run off of. The more RAM you have, the faster your computer will be. You'll notice a speed increase instantly if you install more RAM into your computer. It's easy, and fairly cheap for the amount of extra performance you get.
To a certain point yes. It depends if your operating system is 32bit or 64bit. If it's 32bit you'll notice you can't go over 4GB (although there are ways around this to add up to 64GB I believe, but it involves virtualisation and other work arounds). If you have a 64bit OS then you'll be hard pressed to hit the limit current generation 64bit systems can use. Having more than the system can handle can actually lower preformance.