First let me explain what a paging file is. The best description that I found is in this Wikipedia article, but here’s all you need to know:
In computer operating systems, paging is one of the memory-management schemes by which a computer can store and retrieve data from secondary storage for use in main memory. In the paging memory-management scheme, the operating system retrieves data from secondary storage in same-size blocks called pages. The main advantage of paging over memory segmentation is that it allows the physical address space of a process to be noncontiguous. Before paging came into use, systems had to fit whole programs into storage contiguously, which caused various storage and fragmentation problems.
Now this is true if you have 1GB of RAM or 16GB of RAM. The thing is that if you have more RAM, paging happens less. But it still happens.
Now, what’s the best setting for the paging file? Set it to System Managed Size (if it isn’t already set there) and leave it there. Windows does a great job of managing the pagefile that you should never have to think about it and 99% users would not benefit from changing any of these settings.
Now what about setting it on a different drive? I’ve never seen any benefit to doing this other than freeing up space on a particular drive. Thus you’re better off just leaving it on your C: drive.