"So is there any truth to this"
Yes of course there is. Your stifling the OS.
The system allocates space for it work efficiently. Some of it is non negotiable.
For instance, XP, Vista and W 7 require 15 GB of free space just to operate.
Virtual Memory is roughly 1½ time that size of your RAM
2 GB RAM = 3 GB VM
Restore points. XP default size, 12% of your hard drive's capacity. W 7 10%.
250 GB drive = XP 30 GB, W 7 25GB.
Defragging your drive needs about 10% of free space to work.
If it hasn't got it, then it wont work.
That's 68 GB or so already!
Then there is the space taken up by OS and Security updates, program
and AV updates.
You want a system to work properly, then never fill a drive more than ¾ of it's capacity