Depends on what you are doing with the computer, and what OS you plan to run, but I think that in most general cases, having 512MB of RAM far outweights whatever speed-different there is between types of RAM, because once you start having to hit the HD for swap, the performance loss is an order-of-magnitude greater.
I suppose I should probably weight in futher with this, as I moved from a Slot-1 Abit BX6-r2, PII-450 with 512MB PC100 SDRAM, to a Socket-A MSI KT4V-L, Athlon XP 1.6Ghz, with 256MB PC2700 DDR.
For games and such, which are more CPU-limited than RAM bandwidth-limited, I noticed an immediate difference. However, I tend to do a lot of long-term web-browsing (mostly using Mozilla), and heavy multi-tasking, that includes CD-burning and doing binary file-compares of fairly large (500+ MB) pairs of CD images.
For me, the downward jump from 512MB to 256MB was marked, and performance in some instances was unbearable. I had to change my workload to accomodate, and doing CD image file-compares was totally prohibitive on only 256MB of RAM. Web-browsing got to be a PITA too, especially considering Mozilla's memory footprint, which averages around 300MB of virtual-memory.
All-in-all, I would have rather stuck with the slower system with more RAM. I would have, had not the motherboard gone out on me, hence the "upgrade".
Just a few weeks ago, I *finally* added two more 256MB PC2700 DDR DIMMs, and the performance difference for everyday tasks is just so much better. In fact, using a nightly build of Mozilla Firefox 0.8, for an extended period of time, I managed to get it to allocate up to 1.1GB of VM. Even though it was swapping occasionally, due to the fact that I had more physical RAM (768MB), it was still responsive. (Ok, I'm sure improvement to the Mozilla codebase since I used it on my last system had a factor in that too, but I would say that the increase in memory "headroom" had a far greater effect on the performance than any incremental code-tweak that they've done over the last year or two.)
Now I'm contemplating replacing my XP1800 (running at 166Mhz x 10.0) with a Mobile Barton XP 2500+, attempting to OC to 2.5Ghz, and throwing in 1GB of DDR or more.
Don't forget that W2K and XP each take almost 128MB of RAM effectively for themselves, so running with only 256MB of physical memory only leaves about 128MB left for applications to use, which really isn't nearly enough. I strongly suggest 512MB minimum for a W2K/XP system nowadays.