i always keep hearing people say, having too many stuff in your hard drive can cause your pc to lose performance.

what say you, people?

This gonna go to the hardware thread section...

anyway...if your hard drive become fragmented ...yeah..it'll affect your computer performance...but not your CPU o_O...
but seems nowadays hard drive is quite fast...so you probably won't feel any difference after you defrag the hard drive...
Mostly what caused your computer become slow..or got sluggish performance is that:

1. your antivirus [maybe currently scanning in background?]
2. low physical RAM
3. spyware, adware
4. some background software running...

Yes it can effect performance if you don't have enough free space for the swap file to operate properly.

Plus if it's fragmented (especially the pagefile.sys) it can cause considerable slowing on your machine.

The greatest effect is RAM tho, maybe you have many things running in your system try, you should be able to get it down to 5-6 things on most systems.