Yeah, more RAM. Upgrading the hard drive to a 320gig shouldn't cost much more either.
If you're not gaming or doing huge amounst of rendering, you should get a cheaper chip. If you are rendering, you would probably be better off with a C2D, as they are having massive price reductions soon.
You will be much better off with a graphics card than integrated graphics.evga 7600gt $90 after MIR