If I have a processor that has a 1066 FSB. Does my system only utilize the maximum FSB if I have equivalent ram?

The system will run a 1066MHz FSB regardless of the RAM as long as both CPU and motherboard support it. The RAM will run at a lower (or higher if you decided to spent $500 on overpriced RAM) speed with dividers/ratios.

For example, if you have DDR2-533, it will run 1:1 with the FSB (which is 266MHz, because the FSB is "quad-pumped" to 1066, and the RAM is DDR so it has an effective speed of 533, but is actually still 266MHz), so that means they run the same speed. DDR2-667 will by default run at an FSB:RAM ratio of 4:5 I believe, meaning it runs at 333MHz and the FSB still runs at 266. DDR2-1066 will run 1:2, meaning it runs at 533MHz and the FSB runs at 266, which is half of that.

I think that may be confusing, but in short, no you don't need DDR2-1066 RAM to run your FSB at 1066 (266) MHZ

You should get equivalent ram, if you are buying it, so that you can run your ram at the FSB speed 1:1 without overclocking it.

If you plan to run your FSB at 1066 you should get DDR533.
If you are going to OC the CPU to 1333 FSB then get DDR2 667.
If you are planning to OC further then get DDR2 800.
Etc. etc. etc.
You can always buy a faster RAM and run it at a slower speed, sometimes tightening the timings.
As a general rule I like DDR2 800, it's not too expensive and provides a little headroom.