Is my system overtaxed? Activity monitor readout

Hi, I have an aluminum iMac with a 2.4 core2duo and 3.0GB of RAM. I am currently running four programs and I am not sure if I am overtaxing my system and possibly I might need more memory. The readout of my activity monitor is

Free 14.25MB
Wired 266.04MB
Active 1.79GB
Inactive 956.2MB
Used 2.98GB

Since the free is so low, is that bad? I have 956 Inactive......what does that mean? I am not sure of the difference between Free and inactive... Your thoughts?

 

Well, that seems to have explained it. If the combination of free and inactive becomes low then I should be worried. In my case I have about a gig left so I think I'm just fine. Thanks!!