It is very much possible to run XP and most programs with 2GB RAM and very little pagefile. Some programs require a pagefile and won't work without it.
To get absolute max performance and to stop XP using the hdd for memory you must turn pagefile off. This elimates all jerkiness and loading lag. XP will try and use only the system RAM and will be much quicker. However because XP can't function very well without atleast a small amout of pagefile it is recommended that 200MB is set aside.
XP uses 1.5xRAM to calculate its pagefile, this was based on an average system for the time which was about 256MB-512MB RAM.
2-3xRAM is not a very precise figure to use. What about systems that have 128MB, giving 256MB-384MB virtual memory, that is not enough for that system. Why does a system with more RAM need more pagefile? A system with 2GB RAM would need 4GB-6GB pagefile!!! That is way too much! Any figure between 200MB and 500MB would be more than enough for that system and todays games.

Not too many people that have typical systems (for games etc...) do graphics editing too. Most have a separate system for that stuff and that requires a different set-up like you said.
Memory dumps are stored in C:\WINDOWS\Minidump not pagefile.