See
this thread. You are actually only using 276 MB of RAM and have 1.2 GB free -- hardly pressed for RAM. Linux does things differently than Windows -- it caches recently used files in RAM in case you need to read the file again. If another application needs to use more RAM, the cached files in RAM will be overwritten and that RAM will be used by the new application instead. Though it looks like you only have 37 MB free, most of that is cache, and 1.2 GB are actually usable.
As for the slow application launches, which applications? How long is long? How fast is your CPU? (`cat /proc/cpuinfo` should tell you if you don't know)