Sometimes apps won't open, there is a general feeling of overall slowness, etc.
I had the "sometimes apps won't open" issue in Tiger, but I can't remember having it in Leopard. I'd just log out and log back in and all would be fine.
The general feeling of slowness could definitely be because of the low amount of RAM. 512MB was fine on a PowerPC machine, but on a Mac mini like yours, you need more RAM, since that GMA 950 is using 64MB (I believe) of your RAM for graphics.
I had 1GB in my 1.66GHz mini and the only time it got slow that I can remember was when you first started it up. After that, it was snappy. I believe the slowness after boot-up is because of the slow HD. (5400rpm, I believe in the mini)