I purchased an iBook back in January, when 640MB was the max (though, I've heard that a 1gb stick will function in these iBooks...though not technically supported). Thus far, I've found that it is plenty. A typical day for me involves, mail, web, ichat, itunes, word, excel, and watson all running at the same time. When I use photoshop or final cut, I typically close as many programs as possible. No troubles so far.
Personally, I think it's crazy to spend $400-600 on a 1GB stick when I spent $900 (base price with edu discount) or something like that on the entire laptop...$100 from Crucial for the 512MB was a much better buy, I think.