As far as I know, games don't really come close to using even 512 MB worth of memory (in contradiction to what CandymanCan is saying). I might be wrong on this (maybe we should find some benchmarks
), but from what I've seen/read, even brand fangled new games like Doom3 and Farcry are just starting to push 512 MB. Where you might see a difference in games is load times but I don't think that your in-game performance will suffer much if any at all.
That being said, if you multitask at all, it's probably a good idea to have 1 GB anyway. Having several programs open at once is a boon to productivity and keeps your system from slowing down as you compute. I usually have around 10-15 windows open (5 instances of Explorer/Firefox; iTunes; MS Word; notepad; Winamp; 3dFtp; Photochop) - and let's not forget all the other crap we'll have open that we're not actively using (anti-virus, firewalls, spyware software, etc.). If you're good about using only one program at a time and close your Windows all the time, I guess you could get away with "only" 512... but you really can't beat the flexibility of 1 GB. Hell, if I had the money, I would even consider more.