Yeah, I have a 933mhz. iBook with 640mb of RAM and it does Word, Safari, Mail, iTunes, Photoshop CS & iChat at once without a hiccup.
Just be sure to get a bigger hard drive, because that's the one thing you can't really upgrade without voiding your warranty. And ITASOR is right on the money in that you get significantly less space than advertised. I always enjoyed that about my thinkpad in that IBM gave you a 43.5 gig HD when you got it, 3.5 gigs for Windows & the rest for you...I wish others would do the same.
That & get a superdrive. You're going to want to burn DVDs and getting an external one is more than the $100 it will cost you now just to get one. Also, you might just enjoy the Powerbook a bit more, it's got so many great features (mirrored displays, Firewire800, backlit keyboard, shiny aluminum
) it's worth the extra dough if you've got it.