I can say with conviction that disk defragmenting makes a big difference in the speed of my Windows-based workstations and servers. From boot times to email client load times to vulnerability scanner response times (especially those with a database on the back end), defragmenting clearly helps.
There are plenty of free options, such as the Disk Defragmenter that Microsoft built into Windows (which happens to be available via Group Policy control as well), JkDefrag and Auslogics Disk Defrag. If you’re looking for more horsepower and handling, check out the commercial alternatives, such as Ashampoo Magical Defrag, Diskeeper and PerfectDisk. Just be careful when you defragment your Windows 2003-based systems. There’s a known issue with losing shadow copies of your system, but at least there’s a workaround.