The RAM on my iBook G3 currently is 384mb. I am interested in getting a 512mb RAM for it (£30). Does/will it make a big difference? Its just I dont want to spend £30 on something thats only going to make a small bit of difference.
It depends on what you actually do with the machine.
No offense intended, but asking about Leopard/eye-candy/3d gaming/hench VRAM/iMovie/GarageBand makes it sound like you bought the machine without realising the obvious limitations of a 9-year old computer.
Running Tiger or above, boosting your ram to >=512MB can be a good thing, even for basic/light use. That said, keep in mind the inherent limitations of your machine.