Your download speed dropping to Kbps is a common symptom of completely saturating the uplink which is a thing that can happen. What I’ve never heard of happening is your download speed dropping to exactly a half because you’re half saturating your uplink.
This is a great website to test your connection speed.
It’s also a great way to test your wi-fi signal as well as the quality of your router. If you have an ethernet cable - plug that into your router & your PC. That will give you a reading of what your ISP is sending you your signal at - that’s your max. speed. You can compare that to what you’re paying for.
Then unplug and standing next to your router test again. That will show you any drop off due to your router (this happened to me and when I checked on the website I realized I hadn’t updated firmware in some time = problem solved).
I then use it repeatedly while i walk around the house with my laptop (This is admittedly harder to do with a desktop :D.) I can tell how much the signal strength drops as it goes through walls etc. and I found it way more accurate than the bars on my screen. This helped me place a signal booster.
Lastly, as far as speed goes, we have 100mbs on fibre optic cable directly into our modem. Websites load pretty much instantly. That said, as others have noted, aside from zero lag, the big difference speed makes is downloading stuff. I’d suggest you think about that - Netflix now allows you to download some content - we’re downloading way more now than we did even two months ago.
I also subscribe to a site called Texture, which downloads magazines to your tablet. We were at a friend’s place recently and i was downloading a few for the flight back. After 20 minutes i was still downloading. At home I download 10 magazines in about 5 minutes.
Be sure to test several locations. I was using Speedtest and would get speeds of around 80Mbps but other test sites would give me 160-190. I knew Speedtest was recommended so it was confusing. Finally, I tried testing my connection between my Chicago suburban location and San Jose (picked at random) instead of Aurora, IL and got the same speed results as everyone else – it was the predetermined Aurora node that was slow, not me. So don’t just assume that the closest default location is the best one to test against.
As for how much speed you need, it’s a quality of life thing. Sure, I can set things to download overnight, etc. Hell, I used to set games up to download all day at 300bps while I was at school. But once you get better, it’s hard to imagine going back. Having a friend say “Play XYZ with us” and being able to download it in 10 minutes is nice. Being able to skip around a high def video is nice. Being able to stream stuff with no lag or buffering is nice. Being able to download an album onto a USB a couple minutes before I need to be out the door is nice (heck, I could download a movie). Necessary? Required? Of course not. But it is nice.