With virtual memory, you will require an amount of disk space at least as much as the RAM you have installed. If you have 64 MB of RAM then you can count on needing at least 65 MB of hard drive space beyond the space the system files take up on your drive. A standard install results in about 25 MB of RAM being used just for the System software. If you were to install all the components of Mac OS 9, the memory requirements for Mac OS 9 can go as high as 47 MB with virtual memory off. At this setting you will see a significant performance hit using virtual memory.
Real memory is always better than the virtual kind.
To help you decide what to install I have provided three levels of recommendation for what you should install. Keep in mind that these are my recommendations based on my views of how most people use their Macs. I realize that there will certainly be notable exceptions to these recommendations and please feel free to install whatever components you feel will meet your needs. Remember in almost every case these components can be added and removed at any time, so there is no pressure to install something you aren't sure you will need. If at a later date you have the need for a certain component not originally installed you can just install it later.