Best segmenting method.

I administer what I would classify as a small network of approximately 175 nodes.
Network Traffic and other symptoms are suggesting that I should segment.
I have switches in place that can utilize VLAN configurations for segmenting but I am wonderif that is really the best method for optimizing network performance.
I was thinking about segmenting with routers.
Leaving out the issue of IP addressing and installation concerns,
What segmenting method has the best over all performance gain?