RAM isn't something you have to do now. That can always be done later. Do you use 4GB now? No? Wait. It'll only get cheaper. If you don't want to DIY it, you'll probably have a friend that will install it in exchange for a pizza.
Things like the hard disk and CPU are more important choices, because the HDD can be intimidating for most to upgrade, and the CPU isn't a simple upgrade for most people. Look at your current storage to forecast what you'll think you'll be consuming in 2 to 3 years. If you really miscalculate storage, Thunderbolt will have you covered for external expansion (if not FireWire 800 or USB2).
In terms of display size, the difference between the 21.5" and the 27.0" is this -- instead of two A4 pieces of paper side by side at 100%, you can have three side by side at 95%. It can be a great productivity boon if you have a real need for it.
You're a student. Losing your work can be a big deal. Ensure you have some money in your budget for an external disk or a Time Capsule for backups via Time Machine. If disaster strikes, you will never stop thanking yourself. Keep your most vital stuff "off-site" via a USB flash drive, and/or a DropBox account, in the unfortunate event of a dorm room break-in where your stuff gets nicked.
Make sure you take advantage of any student discounts and the back-to-school promotion as well. If you're replacing your MBP, sell it to offset the cost of any new hardware you buy -- resale value of Apple hardware is phenomenal.