Are you talking about 512MB in a 2 x 256 combo, or a single stick? And is this for AMD or an Intel platform? And define generic...I would call a no-name CHIP generic, but not call Kingston valueram with Hynix or Micron chips generic ram. I will go with the assumption that by generic ram you would be referring to something like Centon or K-Byte, purchased at Circuit City with unknown chips.
If it is for AMD, then I would go with a good 512 stick, if it is a single stick, and run in single-channel mode then coming back later and getting another 512, if needed, and since it would be used for games and video, you probably would need it, at least for the video stuff. The only caution here is to be sure to purchase a current product that will also be available when you are ready to add the second stick. You shouldn't expect a gig of "generic PC3500" to run at lower timings so you would have more of a chance of running at lower timings with good quality PC3200, which would probably also respond better to mild overclocking.
If it is an Intel rig, you need two sticks for sure and since the lower timings, although important, aren't quite as critical, you probably could get away with the gig (2 x 512) of generic ram. That said, I would probably go with 512 in a 2 x 256 setup, then come back with another 2 x 256 later and end up with a gig using 4 sticks. This is certainly a viable option with Intel.