I have a G3 IBook which actually runs pretty well and doesn't seem slower or bogged down at all to me, so I find that odd. Maybe, as nJm suggests, there are some other processes running on your iBook which is slowing it down temporarily
More memory is always better and will improve your iBook's performance with more applications running at once, but as I said, your iBook shouldn't really be slower with your setup.
Run Activity Monitor (in the Utilities folder, inside the Applications folder) and select "Activity Monitor" under the "Window" menu if it isn't up already to see what percentage of memory and CPU each application or process is using up. Alternatively, you can just type "top" in the Terminal (in the same folder") and that'll give you a text readout of the same.
By the way, if you don't care for Dashboard on Tiger, you can reclaim some memory and computing cycles by disabling it through
TinkerTool.