Once you get a new stick of RAM in there you'll notice a GIANT difference. Plus, when/if you sell it, you can always take the RAM stick out and get rid of that, so you really aren't going to be losing a lot of money on that.
Another stick of 512mb's would suit you very well... my friend had a Rev b. iMac 20"er with 512... it didn't run all too well, but then I sold him a stick of 512mb's (I had 1.5gb RAM in mine so I figured I'd sell him 512), and now his runs sooo much better.
Definately a worthwhile upgrade.
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