Will good ram increase gaming performance

What do you mean by cheap and good? Sometimes there the same. What OS do you have?

4 GB are much better than 2 GB for some games and it will continue more and more to make a great difference as new titles will comes out. I think that in about a year 2 GB will not be enough to run many games in Vista or Windows 7, in some cases they are barely enough now.

As for latencies and frequencies, no, it doesn't change so much to justify a great price increase in games. Going from 800 mhz RAM at CL 10 to 1600 at CL 7 improves only 2-3% at max gaming. Usually RAM speed is important to compression and video editing, not so much for games. There's an article here on TH that compares various RAM speed and latencies and explain well what I've just said, here it is:
http://www.tomshardware.com/review [...] ,2325.html
(The article is made for Core i7 systems in mind but it's the same thing with all other sockets if they are not before the Core 2 era)

Having said this, higher frequencies are however useful if you intend to overclock since you have more margin to do it, above all for i7 systems.

Just an FYI, the OS may not show and/or recognize 4 GBs.

In the case of Vista, check out this for more info... http://support.microsoft.com/kb/929605

Edit... Personally, over 3 gigs and I believe you'll see diminishing returns (strictly gaming related). A video card with 512 MBs and a system with 3 gigs, is more than enough memory for gaming.