You said it. Some of our systems would really crawl. Kids keep adding and deleting a lot of large files, downloading study materials which leaves the drives in a pretty bad shape. As for how much performance improvement, besides file access being noticeably faster than before a defrag, we seem to have lesser problems like freezing while running multiple applications. Since its a pain to monitor and defrag each system manually, we have installed one of the commercials tools to centrally manage the task.
Thanks for all you replies guys! Guess its good to keep fragmentation at bay with just a few minutes spent regularly.