Depends on your operating system. If you're using any 32 bit windows operating system, then 2-3 gb of ram is plenty. DDr costs about 2x as much as ddr2, so get only what you need. Fry's has 2 sticks of 1gb pc3200 for $49.99 after rebate, or you can check the for sale sections here and in anandtech.
well my system is 32 bit - i've heard that this would take 400mhz out of the equation, only 333 ram would produce notable effects. is this true?
I've seen this with several boards. But the dell bios may not allow you to manually adjust the speed to 400. On many name brand boards, such as asus and msi, you can adjust the memory speed in the bios. But not with a dell.