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How to increase gaming performance in windows 7

I have heard that Ready boost will also help increase your system performance but I honestly do not know how to do this.

Ready Boost is a feature of Windows 7 that can improve your PC performance. It can utilize your USB flash drive storage space for providing quick access memory.
Connect a USB flash drive. ->Open My computer-> Right-click the USB Drive.->Click Ready Boost’ tab-> Select the checkbox ‘Use this device’

If you have 2GB RAM or more, then you won't get much benefit of using this service.

I suggest you to do regular hard-drive defrags because it rearranges the files on your hard drive for quicker access. You can use Defraggler:
http://www.defraggler.com/

You can also use CCleaner to get rid of unneeded temporary files, fix registry problems and many more.

Use Game Booster to turn off all the non-essential background applications while playing your games. You can download it from here:
http://www.iobit.com/gamebooster.html

Yes you are right Game Booster increases your pc performance because it disables Windows services that come by default with a clean installation.