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Workgroup vs Domain (Centralized)

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I hope this isn't a re-post.

Workstation vs Domain or am I in the right area?

I currently have 17 workstations some with WINXP Home with most being WIN7HP. I have 25 printers. 6 are used for administrative purposes while the other 17 are heavily used printing large jobs. Since we are a workgroup I have migrated everyone's documents to two Buffalo NAS Linkstation's. We have two folders that hold the majority of the files. In the subdirectory there are folders that have thousands of files that people work out of. All day people are accessing the same folders at the same time but not the same files. When a change is made to a file and the user saves it takes up to 1-3 minutes. Another thing, when there are few people on the network it seems things are fine. As more people jump on and begin work the network slows down.

My questions

In the scenario above is it time for domain with a server?

I am using 11 D-Link gigabit switches - Could that be a bottle neck?

Can someone help are maybe put me in the correct direction?

Thank you 

Kevin


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