The biggest drawback is that Windows will create a file called "win386.swp" in your C:\ folder that's 768 megabytes of size. However, since it's now a fixed size, it has less chance of becoming fragmented as it probably was when it was dynamically sized by Windows.
When Windows was managing your Virtual Memory by sizing and resizing on-the-fly, chances are good that part of the win386.swp file was located on one section of the hard drive, while other parts of the same file might have been scattered around the rest of the drive. That's fragmentation, and that slows access. It can also cause other problems, not unlike what you experienced.
Personally, I'd try lower settings on the Virtual Memory to save yourself some disk space. Try setting Minimum and Maximum to 512mb vs. 768. This will set a fixed file size lf 512mb.
Defragmenting the drive first, before creating the new Win386.swp file, is always a good idea.
One caveat: I wouldn't believe anyone who told you they absolutely know the best/optimal Virtual Memory size. There's a lot of variables involved; how many programs you have open at one time, etc.
It's a lot of trial and error.
One thing you can definitely do to improve performance is this: If you have more than one hard drive in your system, go to your Virtual Memory settings and point the Swap File to the second hard drive; the one WITHOUT Windows on it. This will improve performance, as your Windows drive can do other things while the drive with the swap file can do concurrent operations.