Lost RAM after using phone for a day or two I have a Sony Ericsson Live with walkman phone (model WT19i), running on Gingerbread. 

When I restart my phone, it shows about 220MB RAM as free and 80-300MB RAM being used. After using it for - say 2 days - it only shows RAM capacity of about 200MB (80MB free and around 120MB being used). When I cleared all the running apps, (Settings &gt; Applications &gt; Running services), I do not get the full RAM. My phone gets slow. I am left with no other option but to restart it.

This is my first Android device. Is this a common thing with Android devices, or does my phone have problems?
There are multiple things involved with your question. I know this topic is hard to put in exact words, especially for someone new to Android -- so it gets a little unclear what the real issue is. I'll try to cover all I think is related, but will redirect to other questions here for details.
First: How RAM is used.
There is no such thing like &quot;useful free RAM&quot;. As soon as there's &quot;free RAM&quot; available, it will be put to use: buffering and caching are the most interesting features in this context, as they speed up the system. As soon as an app requires additional RAM, and there's no free RAM available, the required amount is dropped from caches and buffers, so this is entirely dynamic and should have no negative effects.
More details:

Why is my Samsung Galaxy S not utilizing all of its RAM?
Why is my device not utilizing all of its available RAM?
Does Android hide some amount of RAM from the User?
Are there guidelines on how much free RAM a phone should have - specifically Samsung Galaxy S?
Android ROM, RAM, Internal storage, External storage and Battery utilization

There are a lot more questions here dealing with this topic. To find them all, just follow the ram tag you already used for your question.
Second: Your device slowing down.
This might have many different reasons: Some app might be hogging ressources is the most likely reason if the problem is not there right after a reboot (but starts only a few hours/days later). If the problem persists after a reboot, reasons might be different (or the &quot;hogging app&quot; got auto-started). Your caches (on internal storage) could be messed up, for example. If you installed/uninstalled a lot of apps for testing, it could as well be the Dalvik-Cache (pre-compiled code of your apps).
Good starting point to investigate this issue:
My device is getting slow, apps start misbehaving/crashing. What can I do?
See also the &quot;Linked&quot; and &quot;Related&quot; section of that question, which will provide you additional ressources.