It was announced Friday of last week that website loading time (aka site speed) is now a ranking factor in the Google algorithm. For the majority of the SEO world, this doesn't come as any surprise since href="http://www.mattcutts.com/blog/site-speed/" target="_blank">Matt Cutts and others have been talking about site speed for almost a year now.
Even though site speed is a new ranking factor, Google has said that it doesn't carry as much weight as other on and off-page factors. Google explains, "Currently, fewer than 1% of search queries are affected by the site speed signal in our implementation and the signal for site speed only applies for visitors searching in English on Google.com at this point. We launched this change a few weeks back after rigorous testing. If you haven't seen much change to your site rankings, then this site speed change possibly did not impact your site." You can read the entire announcement here.
For webmasters, there are a few tools to help diagnose which pages are in need of some serious help in the site speed area. There is a firefox plugin that helps website owners assess their site's page loading time and gives recommendations to help speed it up. Google has also recently integrated a page speed checker in Webmaster Tools that can be found in the labs section.
What this all comes down to, is that Google is all about making the user experience more pleasant (site speed), while delivering the most relevant content.
If you have the best content and provide the most value for a particular industry or keyword, you are still going to rank high, even if your site doesn't load as fast as others. However, cleaning up your site and increasing load time is going to strengthen what you have going for you. If your site is lacking quality content, good backlinks, and other big ranking factors, don't plan on good site speed putting you to the top of the SERPS.