Shared memoryI believe that your notebook has an integrated video card (ATI Radeon 9000 Mobility IGP) which means that it shares its video memory with system memory.
You can increase your video memory to 128 MB without buying a new stick of RAM by simply going into your bios when you boot up your computer and modify the UMA buffer settings from 64 MB to 128 MB. The downside to all this, is that you will be losing system RAM (you are actually now allocating to your video RAM).
Now, if you are using 2D applications (Internet, word, excel etc), you won't notice any speed improvements at all (perhaps even a decrease because you don't have as much system RAM). As for 3D applications (games, CAD etc) you may notice a hint of increase in performance, again, system RAM is still decreased.
As you mentionned, you can get a stick 512 MB (for a total of 1 GB of RAM) and then change the UMA frame buffer (Video RAM) from 64 to 128 MB. Remember your System RAM will be 896 MB because you've allocated 128 MB to video memory.
You don't need to purchase a 1 GB stick if you simply want to get 128 MB of video memory.
I recommend that you purchase brand name memory (Crucial as suddste223 suggested, or Kingston)
Finally, you can also change your UMA frame buffer in the ATI Control Panel (Display Settings) dialog under Frame Buffer.