Did you locate/recover the files? Some suggestions:
1.If you know any of the file names or folder names you can do a file search and locate where the files are if you moved them somewhere else by accident. Be sure to include hidden folders. - This seems like what most likely happened.
2.Enable "show hidden folders" and re-check the flash drive as well as the original folder you had the photos in.
I dont believe the files would be permanently gone. Try these methods before you resort to file recovery software. Next time right click and copy :xyxthumbs:
Also, system restore will restore files to the folder they were in originally (at the time of the restore date) in if the file is still on the hard drive.
Now, 8GB of hard drive space is probably not going to give you marked performance increase, increasing your ram will help a lot but these programs can also help:
Ccleaner - use this to clean up unneeded temporary files, delete OLD system restore points, control what programs run when you startup and uninstall unneeded programs.
Smart Defrag - optimises how files are placed on your hard drive.
Good luck.