On current drives, 20 Gb is not that big...
The folder system volume information contains the various restore points as well as some other system and maintenance files. It probably also contains the journal file that makes the NTFS system resilient.
Most of it's content is constantly been accessed and thus can't be defragmented, then, a great many files that are not effectively used are still marked as open or in use.
Some things you can do:
Make sure that your system is solid and disable drive monitoring, or only keep a single restore point. This will greatly reduce the space needed to store the restore points. it will also greatly diminish your restoration options.
Use CCleaner to clean out as much unused files as possible. Then, do a boot time defragmentation. it's the only way to ensure that you effectively defragment several files.