While I HATE to disagree with Slack, I have to on this point. Defragging IS a good thing to do periodically, not just for your data partition but the system also, since Windows loves to spew temporary files that it neglects to clean up. If you are using Win 98 or later it is a good idea to run the "Disk Cleanup" utility BEFORE you defrag, and remember to clean out the Recycle bin first also.
Since Slack is moving files between partitions, and Windows will copy each file as a contigous block (if destination space is available), this has a similar effect for him to defragging.
Another reason to periodically defrag, aside from performance, it that once a disk gets very badly defragged you will get an increased chance of disk cluster errors. I'm not sure why but I've seen it plenty of times.
Only thing else I'll add is that defragging is something I usually start at night, before going to bed. My 80 gig data drive takes a LONG time to defrag (especially if I've just deleted a bunch of files) so I try not to wait until just before I need to record.