I’m running 4GB (cost less than 150) and NO problems with memory. I, personally, wouldn’t go with anything less than 1.5Gb… get more if you plan on using it for a workhorse.
1.5 is fine for web surfing, general software and email.
Just a point of reference, on vista with NOD32, Commodo firewall, VirtualPC (running XP), XM sidebar, PC monitor sidebar, Firefox and Photoshop all running, it uses approx 50% of my memory. The biggest hit probably comes from VirtualPC
edit: keep in mind that if you upgrade the memory yourself and you are running vista 32bit, you’re limited to approx 3.25GB of memory, even if you have more installed. Go for vista/XP x64 if you want more