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more databases to a server degrade performance

Does adding more and more databases to a server , degrades the performance of sql server.
I have 2 dbs one is of 1GB and another is of 500MB which will give a better performance, and show best read ,write capability among these two
IF the hardware is resource enough say the memory and CPU then adding few database will not have any difference in the performance. In fact you need to look into consideration of DBCC checks and reindexes on the involved databases. To get the optimum results on performanc usage use PERFMON and PROFILER against both the database. Satya SKJ
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Is that means if we add more and better hardware like inreasing the RAM will give us optimal results.
True and good optimization of queries too. Satya SKJ
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