I still use XP on my desktop and vista on my laptop and TBH if it aint broke dont fix it or in this case dont replace it ,
i find a few features of vista annoying such as UAC which to completely get rid off you have to stop security center warning you which for tech savy users ant a big issue but for someone with limited computer knowledge i don't think would be the best thing as far as security is concerned
and the fact that it is all prettied up which IMO serves no purpose at all apart from slowing the machine down .
apart from that it actually does run pretty well on my laptop
but i would say go with the 2gb at least , get as much memory as you can cos its relatively cheap and under vista adds a lot to performance
seeing as it is a build for your mum whom i am assuming is not very tech savvy i would say go with xp cos of the whole UAC issue