yes, pagefile.sys is the paging file. you cant delete it even if you tried, and its .sys so that should tell you that its prolly important. what the paging files is, is it acts like extra ram on your hard disk. so if you have 512 MB RDRAM, and have a 1 GB paging file, you can technicaly say that you have 1.5 GB of RAM. go to the task manager, performance, notice how your total available memory is more than just your physical RAM? it automaticaly adds the size of your paging file.
like i said, you cant delete the paging file, but you can change its size, altho making it too small is not recommended. right click on my computer >> properties >> advanced >> performance options >> and there you can change the locations and min/max sizes of the paging file.