I have the pagefile disabled completely and the system works perfectly well without it. There's no need for a pagefile if you have enough RAM. I have 12GB of RAM and rarely use more than half of it.
But the penalty for running out of memory is severe - without a pagefile there's no place to "swap" RAM to - when you run out, you're basically hosed. The system will stop working until you shut down enough programs to free up some memory. (Windows 7 is actually pretty robust - in my experience it doesn't crash, it just stops until you kill something).
That's why I think a 20% safety margin might be cutting it a little close.