Drive size and speed do not effect needing to defrag. Track to track is the thing defragging helps the most, and so yes, you need to defrag. Saying that, if you are just Joe Everybody, the built in Vista/W7 defragger is OK. As someone else said, if you have V/W7, you ARE defragging all the time anyway, you just don’t know it.
If you are storing a lot of media on a drive, I’d get a real defragger like MyDefrag (it’s free), and create “zones” for the media. Disable the built in one if you do. All modern HDs can handle even the highest bitrate streams even on the inner tracks. Once a month is fine with a good defragger. (The V/W7 one runs daily, so that shows how good it is)
SSD’s only require a defragger if their garbage collectors (not TRIM) aren’t working. (only 1st gen SSDs should need it, though leaving you machine on at the BIOS screen overnight, with the newer ones, about once a month will help them)
(BTW, I did 2 things to a free laptop someone was going to junk. Ran CCleaner on it, then ran MyDefrag. After that, they thought the laptop was great)
No, it will not speed up your system 10 times, cure viruses or world hunger, but your machine will run better. But, you may think you have a virus, because you machine slows down, but all it needs is a defrag.