To Tuktuk,
Advice is cheap but its you and only you that take the risks. In terms of win XP of any flavor, you see a dramatic decrease in boot time when you upgrade from 256 MB to 512MB memory. But after that, its always a diminishing rate of return. But for gamers and those running high end apps like photoediting and the like, 512MB of memory is positively wimpy. But if you have no such memory needs, I would advise you to stick with what ram you have.---because like you say---as an impoverished student, money is always a limiting factor.
But when you are faced with absolutely free OS upgrades, money drops from the equation, leaving only risk and time as considerations. But I would somewhat advise you against an immediate upgrade to vista because of both stability and memory problems. Somewhat standard advice with any new OS is to wait six months or so for them to work the bugs out---and I also fear XP with 256MB memory will be like your 512MB memory with vista.---and then with more normal memory needs, you again will be behind the eight ball.