It may be worth pricing up expansion options e.g. 256M or more.
The other path to consider is changing RAID5 -> RAID10 if your card supports it.
However, I would recommend reducing that shared_buffers setting and doing your
performance measurements *again* - before changing anything else. This is
because you want to ensure that all your io hammering is not just because you
are making the machine swap (by giving postgres too much memory as Scott
mentioned)!
Quoting Stephane Tessier <stephane.tessier@abovesecurity.com>:
> I checked and we have a 128 megs battery backed cache on the raid
> controller...
