If you have enough RAM, it shouldn't make a difference when switching programs. Launching programs (especially large ones, like Illustrator/Photoshop) is a different story.
I got a 200GB drive in my MBP....hoping I'm not going to regret it.
Yes, the 200GB drive is noticeably slower. I have no first-hand experience, but this is what I have concluded from viewing benchmarks on the drive. It's not a slow drive, it's just slower. If you need the extra 40GB, go for it. However, if not, the 160GB is the sweet spot in terms of both speed and capacity.
After comparing XBench scores on Disk tests between my MBP (200 GB, 4200 rpm) and bcavanau's (120 GB, 5400 rpm), it seems that my disk performs about 85% to 90% as well as his on various tasks, without a whole lot of variation.