Adam,
RAM installation link
Demands on RAM increase over time as operating systems and programs become more complex. No OS or program becomes less complex.
It is difficult to know where to draw the line when adding RAM, because different people have differing perceptions. The simplest and most cost effective method is to max out a RAM slot when one has the opportunity. If you do not plan on keeping your iMac for more than a year, then you only need to think about what it takes to satisfy you now. There is almost no economic calculation needed.
However, if you keep and continue to use your iMac for a total of three years or more, it is likely that at some point after that first year you will want, indeed NEED, more RAM than the 1GB minimum that you want today. Keep in mind that you have already determined your minimum for today needs to be higher, but so far have no idea what you want your total RAM to be (or what it should be) at a later date.
As the OS and software programs become more complex, at some point you'll again want more RAM. And, if you start to spend more time on your iMac or start to use software that you're not now contemplating, your desire for additional RAM will increase yet again. If you're then short on RAM, your fun time will feel like work time.
By spending a bit more for RAM at the moment you know you need more, you will increase your levels of enjoyment and satisfaction, as well as your productivity. You will also extend the useful life of your computer - useful to you for sure, but useful to others (read as higher selling price) if you should dispose of it prematurely.
Another reason to add 1GB at a time, besides minimizing shipping costs, is to limit handling your RAM. The RAM manufacturers have learned, through internal studies, that the physical handling of RAM is the main cause of non-working RAM. Max out the slot with decent quality, warrantied RAM - so that you can forget about it and instead spend all your time using it. Best of luck with whatever you decide.