I just bought a E8400 and am not sure what speed of DDR2 I should get. I don't plan on overclocking it. Since the FSB is 1333mhz, is the best I can get DDR2-667?

That is contingent on your motherboard actually. That processor can use DDR 2 or DDR 3. If you have a motherboard that supports only DDR2 then go with DDR 800. If your board supports it and you are trying to get the fastest DDR 2 that is reasonably priced go with DDR2 1066.

If you want to run 1:1 then yes. 667 is all you need. Most mother boards will run the ram faster. I see an improvement in responsiveness and in number crunching from running the ram faster. My ram is set at 400 MHz (DDR2 800 speed) and my CPU is a Q6600 with no OC. That puts my ratio at 2:3 and all runs well.

Plans usually tend to get changed as time goes by, true PC2-5400 will work perfectly well @ 1:1, but it's basically the same price as PC2-6400 (800MHz) and you can 1:1 a 3.6GHz O/C out of the e8400 without extra cooling or VCore changes (or extremely small one).

But, if you are 300% sure you'll never try to OC, then the 10$ you'll save on a 2GB kit can be put elsewhere I guess.

I am planning on going with DDR2, as I am trying to save some money. I don't want to spend more then $100 on the ram. I may have to overclock it to 3600 so I have a decent choice of ram. It is hard to find any DDR2-667 but "value" ram. It seems like such a waste to use such slow ram with the E8400.

$100 you say?
http://www.newegg.com/product/prod [...] 6820231145

Of course, I'm in the "Just buy DDR2-800" camp myself. You'll save yourself ~$20. DDR2-800 is basically the same price as 667, and gives decent overclocking headroom (without OCing the memory).

2GB kit (2x1GB) of DDR2 800 for $45. It has 1500 reviews.
http://www.newegg.com/Product/Prod [...] 6820231098
That is the memory I am buying when I can secure an 8400.

If I get the DDR-800, can I underclock it to 667?

yes, but you might be better off with the 2:3 ratio.