|I agree with comp_ere and subhash chandra that a defrag is vital to the PC's health.|
Fragmentation occurs when pieces of files and free space are incontiguously scattered across a disk. The disk has to do multiple writes when saving such a file and multiple searches are executed when accessing these broken files.
This basically means much more disk wear than needed.
When the disk is defragmented, the pieces are made contiguous so the files are not only found much faster, the disk is used less so it lasts longer as well.
The built-in defragger is not really practical as it takes too long to defrag and the PC is pretty much useless while it is defragmenting, so I also agree that a good third party program is much better.
Here is a Top 10 Reviews side-by-side comparison of the best defrag programs avaialble:
The top placers all run automatically while the gold medalist (Diskeeper as mentioned above), won because the testers could not tell it was running even though they used the computer heavily during the defrag.
They also appreciated that it prevents fragmentation.
Most of the top placers offer a free trial so you can try before you buy.
Check out the review.