Last year Matt Cutts from Google mentioned that a new ranking factor might be introduced into the google index algorithm.
Site speed is not only important to for keeping people on your site but can have an affect on the speed google indexes your site. Now it would seem it will affect ranking as well.
There are many tools out there to monitor performance and this should really begin at the development stage with tools such as Yslow and Firebug.
Yahoo have just released Boomerang which is a piece of javascript that you add to your webpages. This measures performance from the end users point of view so gives you greater visibility on real life performance
http://yahoo.github.com/boomerang/doc/
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