My own MacBook Pro is pretty similar in terms of spec - 2.7 GHz Core Duo 2, 4 GB and the obvious 5400 drive. For such a low spec machine, it actually performs pretty well. It always depends on what one means by song writing and home recording.
My projects usually end up between 40 and 60 tracks (more often on the 40-ish side) w/ EQ and compression all over the place, a few busses w/ reverb, automation. The bundled effects are very good (as I mentioned, the compressor is my favorite comp all around) and they also incredibly light on CPU. I'll often have a couple of reverbs running - Lexicon and/or Valhalla as well as Space Designer (Logic's own convolution reverb). But I also use Waves plug-ins and McDSP on occasion.
When mixing, I gradually increase the buffer size as I see fit when needed. I can't tell you that I ever maxed out my machine - not using Logic, anyway. Pro Tools' a different story. Most of the time, I have Mail and Safari running in the background, and iTunes quite often. And I didn't tweak anything - the machine is configured exactly as it was when I left the store.
When recording, I have the good habit of planning ahead which I guess serves me well. For example, I use only one pair of stereo outputs in Superior Drummer for as long as I'm in songwriting mode and working at very low latency - especially if I need to use Kontakt on top of that and and also need to monitor guitar tracks through amp sims and such. I know that Kontakt is highly unoptimized so I'll freeze that as soon as I can, and once I'm done recording and the arrangement is figured out, I'll have Superior Drummer use multiple outputs, and such... Maybe some people prefer to work otherwise, but that's my workflow, anyway.
As for the included stuff, I actually use them quite a bit, though I tend to not necessarily use them in a very orthodox way. When I'm not working on traditional drums/bass/guitar stuff, I'm more into odd soundtrack kind of things. For brasses, I couldn't tell, I just never use any. But there are definitely some decent piano, bass and such. I also have my own sample libraries - stuff I've created or instruments that I've converted into EXS-24 instruments.
If you ever get Logic, it's worth checking out Eli Krantzberg's EXS-24 tutorial on Groove 3. Amazing stuff which shows, among other things, how quickly you can customize and/or create instruments. Worth every minute you spend watching it.
Here's an odd little something - intended to sound a bit like atmospheric DVD menu music - I put together for fun a few months back using only EXS-24 stock sounds and Logic's bundled FX. Nothing fancy and not actually mixed and too much reverb, but it gives an idea of some kind of sounds...
http://www.youtube.com/watch?v=uKjlXwVCabI