if rooted, changing both minfree values and the VM heap size can make even the oldest Android phone run like a champ. kernels that allow overclocking help immensely.
FYI Android is meant to consume RAM. the problem is the number of apps that run and fight for their place in a limited device with low total amounts of RAM. let's say the phone has 256MB of total user RAM, this being what is available after the phone is booted up. then add in the lockscreen, launcher, app background and notification agents, widgets, and any custom stuff and the amount remaining is now at 50MB left. Now, this is not a problem since Android is designed to use as much RAM as possible and automatically kills lower-priority apps (those used rarely) to make room for say, an app like Google+ you just launched. Unfortunately, if you installed tons, then you now have say 100 apps, with their own background processes, widgets, etc each fighting for that 50MB. Android does its job as best it can, but now there are 20 out of those 100 that restart after Android shut them down. let's say you had just initiated two downloads in the Play Store, then try opening Angry Birds. Angry Birds needs a hefty amount of RAM, but Google Play is using some of it, so Android does one of two things. Either the game just dumps to the home screen, or it tries to load, shutting down Play as well as two active downloads, which will likely attempt to restart. this fighting for RAM between two hefty apps on a device with insufficient RAM to hold them both then give you the black screen and eventually the 'Sorry! the application Angry Birds is not responding [WAIT][FORCE STOP]' dialog.
Bottom line, it isn't that Android runs out of RAM, but that too many apps want space in too little RAM. result? the infamous 'Android Lag' associated with older Android 2.x devices. root and changing minfree values (amount of RAM allocated to particular parts of the system, how much to reserve for apps, etc) and VM heap size (how much to consume before Android's built in task manager starts killing apps/services) can help, however i would buy a better device in such a situation unless you are attached to your current one for some reason (was with you when you got your first kiss, perhaps?)