Yes, the most likely cause is not enough RAM to feed the memory-hungry iTunes application, especially iTunes version 7. You can perhaps verify this by shutting down all other applications except for iTunes. If you try that, use the Task Manager to kill non-essential applications, including Itunes auxiliary programs ituneshelper.exe and ipodservice.exe. Other tasks you can safely terminate are qttask.exe (QuickTime), iexplore.exe (Internet Explorer), and others that you recognize as applications you use. If you don't know what a task is, don't mess with it.

Another solution that works for some Windows users is to go to Control Panel, Click on Quick Time, Select the Audio tab, then check the Safe mode (waveOut only) checkbox. Now look below in the Sound Out section and set Size to 16 bit. Close Quicktime and iTunes and re-open them.

If you notice a lot of hard disk activity while running iTunes version 7, it could be that iTunes is scanning all your music files for gapless playback info, a new feature in this version. The scanning process can take several hours (depending on the speed of your system and the number of music files you have) and may cause skipping while songs are being played.

See the comments below for additional information, or to share what works for you.