Mmmmmmmm.....
OK, I'm of two minds here, so bear with me.
First of all, you (the OP) say that the computer _feels_ slow and sluggish when the free RAM is low. You can drive yourself nuts with mental correlations like these - I do it myself from time to time.
If you can further describe or quantify the sluggishness, that would be helpful.
Secondly, Snow Leopard is very aggressive (perhaps overly so) in keeping data in RAM. Generally speaking, if there's data in RAM that isn't being used at the moment, then it will be marked as inactive. So, if you have a lot of inactive RAM, you can view that as free. However, some people (including myself) have noticed that swapping occurs when the amount of inactive RAM is high and free RAM is low or very close to zero.
Swapping will make things feel sluggish or unresponsive.
I think I've tracked this down - in my case - to using Parallels 4.0.
I agree with Hellhammer, quit apps from time to time to truly free up RAM.