Mazzy
you need more than 1GB RAM - I have that on a laptop that I bought over 2 years ago!!
I don't play games but do a lot of photo and video editing (adobe CS2 and Premire Pro 2). Big meaty programs and big meaty files (high definition video, 12 Mega pixel photos)
1 Gig of Ram is just about the minimum for my needs. You need to future proof your machine when you buy it (or as much as you can do... it will be 'obselete' in 6 months).
As computers get faster, programmers get lazier. Yes there are some awesome games out there, but the memory they require is way out of proportion to the memory required on the old computers (ZX Spectrum etc).
With the old computers, memory and performance were in short supply so programmers had to keep programmes tight, with a very competitive market (probably as, if not more competitive than todays market).
Save money on the monitor. Buy the cheapest monitor Dell will allow you, then get a 19" monitor elsewhere for about £179 (check Kelkoo.co.uk or pricerunner.co.uk). You will not be losing out on the quality, just paying less.
Although Dell and all the other online computer sellers do it in bulk and therefore tend to be cheaper, they do charge a healthy amount for adding to the basic spec. You could easily find extra RAM etc elsewhere at a lower cost.