One of the main features that I had noticed in windows 7 is that it consumes less physical memory when compared with Vista. I tested this on my old computer which wasn't working very good with vista but have been working perfectly with windows 7. Have anyone noticed this on your computer.

Yes, I have found out the same.
The starting time is shorter too.
When I start my old Windows XP system and the Windows 7 at the same time, I am already in the web while XP is still coming up.
Windows 7 is really fast.

that is good to know, Vista consumes a lot of space on the hard drive!

Does it use a lot of your RAM memory like Vista does or not?

Significantly less. I installed it on an old machine that struggled with XP, and refused to even look at Vista. It has less than the required minimum specs for 7-and yet works great! The overall score is just 2.0 because of the graphics card, but its breathed life into an old machine.