Today Google announced that they have addded site speed as a part of their ranking algorithm.
This has been expected for quite some time and Google states that they are concerned with site speed as an indicator of improved user experience on the web.

“Speeding up websites is important — not just to site owners, but to all Internet users. Faster sites create happy users and we’ve seen in our internal studies that when a site responds slowly, visitors spend less time there. But faster sites don’t just improve user experience; recent data shows that improving site speed also reduces operating costs” – Google

It is still unknown exactly how much of a factor site speed will be on your site’s rankings, Google has indicated that it will lag far behind site relevance yet it can still have an effect.. .especially for users with bargain-basement hosting plans on crowded, shared servers.

If you are a site owner, webmaster or a web author, here are some free tools Google has suggested to evaluate the speed of your site:

* YSlow, a free tool from Yahoo! that suggests ways to improve website speed.
* WebPagetest shows a waterfall view of your pages’ load performance plus an optimization checklist.
* In Webmaster Tools, Labs > Site Performance shows the speed of your website as experienced by users around the world.