Higher mhz or lower timings?

I assume that you are talking about the same RAM. The usual comparison is DDR2-800 at 4-4-4-12 and DDR2-1066 at 5-5-5-15.

4 clock cycles at 800 MHz is almost identical to 5 clock cycles at 1066 MHz in terms of time, i.e. number of nanosecs = (frequency/# of clock cycles).

For your two examples, the timing intervals are also identical. Which one you would use will depend on the FSB frequency. If your FSB is running at 267 MHz and you know that you are not going to overclock, running at 4-4-4-12 will be imperceptively faster. If you are running your FSB faster, you will need the looser timings.