trykael is correct, when windows 95/98 were around and hard drives were small and the file system pretty much sucked. Fragmentation actually slowed down your computer. Right now what's probably slowing down your computer can be cleaned up with anti-virus, ccleaner, and only running the programs you need.
To change what starts with your computer
(start -> run -> msconfig -> startup tab)
I disable everything except for AVG, and my ftp server.
EDIT: If you've ever reinstalled windows and thought your computer was faster, there's a good chance that all you did was remove crap that could have been removed without reformat.