Do I need 1 GB of RAM or two 512 mb's?

If you plan to upgrade in the near future, one 1GB stick would be best. If not, 2 512MB sticks would provide a bit better performance.

Edit: Actually, I don't think you can get the one 1GB stick configuration on the MacBook 2x512MB may be your only option.

1 gb ram is good investment, and when you have another extra lunch money, just buy another 1 gb module and you will have 2 GB with no module to waste except the original 2 x 256 apple default. that is if you buy the memory outside apple store, you can buy 1 module, but in apple store the BTO will give you the option to 2 x 512 Mb or 2 x 1 Gb, but replacing the memory is very easy, even apple provide the manual for that on Mac book support.

2 x 512 mb will perform better than single 1 gb since this mac book support technology that optimise throughput when it is install in pair (i could be wrong on the term name).
And also your vga chip set will perform better with 2 x 512 mb. But after that if you upgrade this Mac book in the future to 2 x 1 GB, you will have another extra module to waste,.. or maybe not if you can sell it on eBay.

Hope this will help.

If you use just one stick (possible) you'll lost some speed. But only 4-6%. 2 sticks "are faster".