I agree with XMS, except I definitely wouldn't throw away the modules already installed. Since the modules already installed were installed by HP and came with the system, any vendor that sells you memory with a compatibility guarantee is guaranteeing that the new memory will work properly along with the memory already installed.
Since 1GB modules tend to be premium-priced these days, I would just buy a 2x512MB kit for around $100, giving you a total of 1.5GB. Since your computer has only builtin Intel 900 graphics and no AGP or PCIe slot for a graphics card, and is otherwise a lower-end PC, i wouldn't spend more than $100 (for the memory) on upgrading it. Upgrading to a decent Vista version will cost $150 or more just for the software, and still will perform slower than XP. It'll be much more cost effective to buy a brand new Vista computer in a year or two -- you'll get dual-core, decent graphics, etc, for a lot less.