Hey my computer handles the files pretty decently but I'm editing a long project and vegas is crashing on me so I was wondering which of the following is the best technique to edit a video with?

Transcoding (Which program is best?)
Proxy (How do you do it)
or just upgrade my computer? (Quad core 2.4 ghz processor, 4 gig RAM, 786 VRAM, 500 GB 5400 RPM, what should I upgrade and to what? Should I overclock?)

If it's simple editing why not try a free trail of Corel Video Studio Pro X3, it has a Smart Proxy editing system that works in the background and you will scarcely notice it apart for the lower resolution on your monitor, it only needs one mouse click to activate it and from then just edit as normal, when you out put your final video it switches back to the original camera files without any intervention on your part.

The only thing they need to improve is what they call Smart Render, I never use it. Other than that it is one of the best programs I've tried.

Bryan

I use canopus edius pro and transcode dslr footage to the canopus hq codec, after that editing is real smooth on my 3 year old q6600 machine.

One thing I would change in your current pc is the harddrive, 5400rpm drives are not good for video editing, get 7200rpm drives instead, one for you OS and programs and at least one separate drive for your videofiles.