That looks like a good box for what you want. The 15.4" screen is really nice for DVD's, too!
The memory you can probably get cheaper at
www.crucial.com than by buying the upgrade through Dell. But it looks like it's only $100 more to go to 1 gig from 256. I'd do that if it was me. RAM can make or break computer performance. Especially on laptops.
I would also get XP Pro with it, and not the Home edition. XP Pro and Centrino/Mobile processors work very well together. It enables some of the features in the processor that Home won't. Saving you precious battery life. It also offers more security with your wireless devices.