Amount of RAM is a big deal, but the speed less so. You pretty much need 4GB these days, less than that and your system has a very good chance to start running on file paging, which means all of a sudden your system speed goes from a lightning fast RAM access to a super duper slow HDD access, and everything will just lag.
As for speed, not as big a deal. If you can get 1333mhz CL8 it's ok. 1600mhz CL8 is more for an enthusiast, and then you can go better to 1600mhz CL7 or even really crazy there's some 1800mhz CL7 stuff but that's ultra high end... this is assuming DDR3, btw. DDR2 speeds are slower but also have lower timings.
It's very important up to a certain point (which is in the 3-4GB range for average use on a W7 system these days), less important past that point. You can go down to 2 GB, but there's a reason you'll only see that on bare-bones budget builds like the $400 System Builder's Marathon.
Basically, you go much below that point and start multitasking (or open a million browser tabs), the system starts writing things to the hard drive instead of caching in RAM, which is dog slow. Above that point, you're still paging things, but they're less and less important, less and less used things. Get enough RAM and you can turn off the paging file altogether (something I've never tried, but I'm running 3 GB).
There will be an enormous difference between 0.5GB and 1 GB, less between 1 and 2, less (but still noticeable) between 2 and 4. Much past that you'll see less of a difference, unless you heavily multitask. The difference between say 6 and 12 GB will be little for an average user (if you need more than 6 GB, you usually already know).
Generally, as Wolfram said, amount > speed. It's far more important that the data you need be in RAM rather than paged to the HDD (thousands of times better latency) than it is that the data be moved from RAM to the CPU 20% faster by getting higher-binned RAM chips.