I've spent several hours in this game after downloading it from gog. It really is a fun game -- a fully engrossing environment, and I can see why people love it so much.
However, I've been getting frustrated with the difficulty. Every other encounter I have, I end up dying... Maybe I'm not playing right, or I didn't spec my character well, but I'm considering setting the difficulty knob to Easy to continue. It seems so cheap to do that, but better that than stop playing the game.
Anyone else find the game rather hard, or have any general tips for someone struggling?

It's tough to offer specific help without knowing what kind of set-up you have going on but here are some basic tips
Specialize: Don't spread out your skill-points. Tag 1 or 2 from the start, I'd suggest something like small arms, higher weapon skill will increase your accuracy significantly.
Use Stim-paks: they are fairly abundant so don't be afraid to use them in combat, also give some to your NPCs so they can use them as well. Remember if you open your inventory you can use more than 1 stimpak/combat turn so if you're running really low on health consider this as an option
Target: A lot of times targeting specific body parts (the eyes for example) can have a huge impact on the outcome of your encounters. Groin shots will knock male enemies over and aiming at limbs can cripple them and limit your enemies' effectiveness against you.
Save Often: You're bound to die while playing through, save often so those re-loads aren't so painful
If you're already doing the above things, try posting a little more info about your character and the specific encounters you're having trouble with. Best of luck!

Thanks for the response, Cameron.
Here's some specific things I'm having trouble with.. I'm unable to get the guy in Shady Sands to join my party.. I forget his name now, but reading hints online I see I should be able to get him to join me, but he won't.
I'm currently trying to defeat the monster (Deathclaw?) in the cave that Slappy sent me to. However, I don't even come close to beating him. I have a dog following me around that is helping though..
Not a single one of my weapons allows for targeting body parts. I have a pistol, rifle, SMG, and shotgun. Right clicking them once selected, all I get is Burst for the SMG, and reload for the others, but no targeting.
These are just some of the things that are troubling me :)

You should come back to this guy later.

With a pistol you should have the ability to target specific body parts. You will see the world "Single" and when you right click the item in your active item slot you'll see the word "Single" and in the bottom right corner of the box you'll see a yellow target. When this target is visible it means you are using the targeting system. If you are unable to do this my guess is your character doesn't have enough AP to use the targeting system, as it does cost an additional AP.
The NPC in Shady Sands is named Ian, and with high charisma he'll join your party for free, otherwise you have to pay him 100 caps (might be 200, not 100% sure). He is well worth it, especially during the earlier stages of the game and once he is in your party you can just steal your money back.
The deathclaw quest is given by an NPC in the hub, at that part of the game you should have some metal armour, and perhaps even combat armour depending on how much cash you've accumulated. In the old town district of the hub there is an NPC Jake who sells a lot of weapons, all of which would be upgrades for you (combat shotgun, sniper rifle etc). Additionally, there is a guy in merchant square who will ask for your help killing the raiders at his home (you need relatively high karma for this) and as a reward you get a .223 pistol which is one of the best weapons in the game.
My guess would be that you've skipped a lot of side-quests and that your character needs to level-up a bit before he can take on the deathclaw or that you haven't upgraded your gear enough to handle the fight (he is a pretty tough fight at that stage of the game). If you need cash there are a lot of side-quests in both shady sands and the hub, that should get you some upgrades as well as some xp.
Any other questions just ask away

Great help, thanks again.
I'm wearing just a leather jacket right now, and haven't done many sidequests. I've only done Vault 15, radscorpions, and saved tandi. I must be missing things.
I think I'm going to start the game over, and concentrate more on my character stats. Namely, I'm going to give him high charisma to get Ian, and also specialize in small weapons so I'm better with the pistol.
I'll focus more on side quests as well.
Thanks again!

also, don't take tandi back to shady sands, you can 'steal' from her and plant weapons and ammo and stim packs as well as armor on her. but I don't think she'll use the armor unless you're using this realy nice npc mod

What do you mean don't take her back? She'll fight for me?

Definitely starting over. Thanks!

**Spoiler warning** Some stuff in this post could easily be considered spoiler info, read with care! :)
Hey mate, welcome to the wonderful world of Fallout! Hope you enjoy it as much as I have over the years. It's quite honestly the best computer RPG I have every played.
When developing your character there are a few things to keep in mind. Stats are important and none are really less important than others.
Str will let you carry more and hit harder in melee.
Perception lowers range penalty with ranged weapons.
Charisma makes NPCs more agreeable to your suggestions and effects bartering.
Intelligence gives you more options in conversations (which can be very helpful) and more skill points when you level.
Endurance gives more HP and resistance to other forms of damage (radiation and poison etc).
Agility boosts a heap of skills and gives you more action points. Very important stat!
Luck effects crit chance and random encounters among other things.
Pick your tag skills carefully. It a nasty wasteland out there, if you cant handle a fight you wont last long! :) Accordingly I'd recommend tagging two weapon skills and one other. You could get away with tagging only one early game weapon skill (melee or small guns), but then you would need to remember to put a good few points in big guns or energy weapons every level right from the get go, so that the skill will be high enough to be effective when you actually get those weapons later in the game.
Useful utility skills are First Aid, Doctor, Repair, Lockpicking. Those are my favourite.
Also, the two free pics you get at the start, one of them stops you from being able to target body parts. Dont take that!!! Targeting is pretty critical to fighting. Realise that you do not have to take those picks, they are optional. I take bloody mess (it's iconic to FO culture!) and I think Gifted? The one that gives you +1 to all stats.
You dont need as high a strength as you think. Later you will get armour that will boost some physical stats.
Get your tagged early weapon skill up asap. Get it to 120% and that will do for the moment. Aimed shots to the eyes with any weapon are brutal and with a knife you can get off three aimed swings if you have 9 or 10 Agility.
Ian from Shady Sands joined me for free when I offered him a share of the loot (I have only 4 Charisma in my current game).
Dont expect any of your companions to survive, you cant equip them in armour in FO1 (FO2 NPC management is vastly improved!).
Killian in the Junkyard will give you a mission that will earn you a reward of a selection of items, the leather armour is nice.
Once you are happy with your skills and have leather you could think of taking on the raiders in the raider camp. You should be able to loot metal armour off the leader once you beat him. It's a big fight though, so take it easy.
Dont feel bad about saving early and often. One lucky critical can reduce you from full life to dead quite easily. It's a brutal game at times, but all the better for it I say. :)
Take care and good luck out there! :)
JK

leather jacket and youre in vault 15?
You should talk around and try to do some low level quests. Also whenever I start a game I try to spread my tag skills in terms of when I will use the skill. 1 early game like small arms, 1 late game like energy weapons, and then 1 all around like steal. Also be aware that in this game everything is based on percent. when trying to use objects sometimes you have to use them more than once for them to work correctly

Wow, at 120 when hitting the Raiders camp? No wonder I am getting creamed there. As soon as I get in there and Ian usually gets himself killed fairly rapidly. Even though I'm taking out all the guys and managed to kill the leader, Tandi is always murdered long before I do.
I know I did this many years ago when the game first came out, but I'm finding it harder now.

For the Deathclaw fight, I used a dose of Psycho, which adds +3 Agility and +50% to damage resistance. I bought it from the General Store in the Hub. I think it cost me over 600 caps, but it was worth it. I just kept targeting the eyes with a shotgun and got a bunch of criticals, doing 30-50 points of damage with each hit. The blinded Deathclaw barely scratched my drugged up character, only doing about 10 points.
To rescue Tandi, I went with shock and awe. I was alone. First I threw a few grenades, knocking down several of the "melee troops" and some of the damaged Raiders ran away. I then kept using my SMG in burst mode. If you hit someone at point blank with a burst, they usually take 50+ points and drop. I dropped a melee guy with my first burst, then I concentrated on Garl and his assistant becuase their guns were doing more damage than the melee guys. When shooting at Garl and hitting for 18 points, I also managed to hit a melee guy for 28 and drop him. Sweet! I had to use up all the Stimpaks I brought with me, but I was able to take out the entire "welcoming committee". I looted the bodies, got some more Stimpaks, and healed up. Then I took out a few more guys who came at me one at a time - they died quickly to more SMG bursts. I found some lockpicks, and freed Tandi.
She stabbed all the Raiders who tried to run away by running onto the exit grid. She can walk onto the exit grid, even though you can't. Awesome!
By the way, I got my armor by shooting a Raider in the face before the Tandi quest dropped and looting his body. I was then able to run away before the rest of the Raiders took me out.

If you chose the "Fast Shot" trait during character creation, you will lose the ability to target body parts. On the plus side, that trait makes shots cost 1 less action point. I'm not sure if this is the root of your problem, but I thought I'd toss it out there because I personally like the "Fast Shot" trait :)