The only possible "problem" i see is the 300watt power supply that comes with that case dying because it can not provide enough power to your system.
As far as ssuggestions are concerned,
1. Go with a single 512MB stiick, that way when you decide to upgrade to 1GB, you can just pop in another stick of 512 rather then sell the 2 256's and then buy a couplo of 512s afterwards.
2. how about a 9700 or maybe even a 9800 (if you are going to play games ... it will be well worth the extra $20-$50)
3. No need to have a CDRW and a DVD burner, as DVD burners will burn CDs too (unless of course you like to do on the fly copies)
4. you may want to consider a Shuttle board to save a few bucks. (IMO they are just as good as Asus or Abit boards these days, though they do have less fan headers then the Abit and Epox boards I have used)