IMHO It is a hell of a deal, but with Vista out now, I HIGHLY suggest getting a computer with 1GB of ram. It is not 'needed' with the new operating system, but it will just help things run more smoothly and save you a headache later on by getting pissed at your computer for going really slow.
You can't avoid Vista, Its like judgment day in Terminator, its going to happen. Also, unless you build your own computer, you won't be able to find a major retailer who sells computer at those prices. (Except http://www.newegg.com most likely still has some.)