The time it takes for your page to load, or page speed, is important. Recently Google’s Mark Cutts uploaded a video on his blog about the extent to which page speed affects SEO. Page speed, it transpires, is important, but how much does it matter and how do you increase it? Google does use page speed for your page’s overall ranking, but there are 200 other variables that also contribute. Only if your page speed is so sluggish that Google can’t access your page to rank it, does it become a priority in page ranking. That does not mean that page speed is unimportant in the SEO scheme of things.

An Internet user has an enormous number of choices in websites. You need to get as many visitors as possible choosing your site and spending as much time as possible on your website to get a good ranking. Therefore you need a properly designed website with loads of interesting information. The best content in the web, however, is of little value if the page takes too long to load. The most effective way to increase your page speed is to prune unnecessary coding and other media elements which can be distracting. You should make your site easy to navigate. While good content is crucial, it would be to little avail if the visitor has to trawl through a thicket of unnecessary content which slows down your page speed and will repel visitors.
Google has a nifty tool with analytics report that you can use to measure your site speed. Use this tool to find out which landing pages are slow, what the download speed is on different browsers and the difference in page speed in different locations.
This tool has a lot of benefits. If it turns out that your target audience is in an area with slower page speed or your site takes longer to download on a different browser, you can make valuable adjustments.
You can only concentrate on the things you can change. You can’t control everything that affects download speed. Factors beyond your control are Internet connection speed, how far the visitor’s computer is from your server and which browser they’re using. By streamlining your website and getting rid of unnecessary text, images and other media, more visitors will come to your site and they will stay longer. This will be reflected in your site rankings.
http://code.google.com/speed/page-speed/
http://googlewebmastercentral.blogspot.com/2009/06/introducing-page-speed.html