Agree with all of the above; thanks to the dude for posting all that so I didn't have to!
I'd stress the RAM most of all. More RAM is ALWAYS better.
I also use a Logitech cam and the supplied software. I'm guessing you have the model that is one step above mine.
I get the best results using the AUTO setting. Picture clarity is perfect, lighting need not be adjusted, speed is optimized. There's very few tabs and settings to sift through with the Logitech software, so just hunt around for it. I am not at home and don't have my cam or software on this PC so I can't give you explicit directions on where the AUTO setting is -- but it's very easy to find.
What's interesting is that for me, MY image moves MUCH faster than the image of anyone else. However, I tend to use public sites rather than a cam to cam interface; public sites are slower.
If you are using NetMeeting or ICUII, fiddle with those settings as well. Eventually you'll find the best combination.
As for whether or not the other guys are seeing slow video from your cam -- why not just ask them?