I have an 8 core MacPro with 8gig of ram installed. I have 6.5 allocated to AE and I'm still getting some hangs and spinning beachball even with some relatively easy rendering and playback. I thought that I had to leave a little power(1.5gig) for the computers system to run would it harm the system if I increase the ram allocated to AE?
it's probably not quite as bad as dave makes it sound, but you'll probably be doing more setting tweaks between comps than you would if you had more ram...
for a base setting, i think you could enable multiprocessing, leave about 2gb and 4 cpus for 'other apps' and try 1gb min allocation for each cpu.
when you work with ae, try not to have other apps open, especially other ram hogs like photoshop.
also, try running the activity monitor as you render or preview to see how efficiently the cpus are running. if you have consistently low cpu levels, then you'll want to tweak some mp & memory settings. sometimes giving ae a few more cpus will make it faster, other times taking a few cpus away (which give more ram to the available cpus) can improve performance... it really just depends on what's going on in the comp.