Given that you are putting a 12" PowerBook out to pasture, it seems likely that you will probably end up keeping whatever you buy now for a number of years. In that case, I'd strongly suggest that you choose the RAM over the processor, as it will allow the machine to cope with the more memory greedy programmes that are developed over the next few years.
I tend to buy around every three years - a cycle that coincides with the end of my Applecare. I bought a MBA in 2010 - a terrific machine that traveled the world with me - and have just now upgraded. That meant that I jumped from 2 RAM to 8 RAM - for the sake of $100 (US) or 100 (Europe where I am from) it seems a good investment to add an extra 4 RAM to the basic configuration. The difference in speed is incredible, and my new MBA (11" with a 256 SSD) is blazing fast. The model I bought also came with an i7 Core, but, to be honest, that wasn't my real priority.
Good luck with it.