Both, actually. Getting 800Mhz ram on a 533Mhz computer would be a waste of money on more expensive ram that you couldn't use the speed of. Now, if you were to sell it down the road, the 800Mhz would command more money later - though fyi the next top of the line chipset (680i from nVidia) supports 1200Mhz memory, so you're already falling behind with that, in a way. The 800Mhz would also be better in case you upgrade your computer later on.
Now, do you really need 2GB? Sure, its nice, but look at your other components. A 2.8Ghz P4. Is it hyperthreading? My 3.2Ghz P4 600-series doesn't necessarily need that much ram, especially with my 5900XT graphics card. 1GB (which is coming) is sufficient. Also, your graphics card. x700 graphics are not top end, and are not going to be pushing maximum framerates, anyways.
You can upgrade the ram, and yes its going to make it a bit perkier. However, really your cpu and graphics card are aging and will show their bottleneck even more when you do. Perhaps it may be time to start considering a new build? 2GB of ram would go great if you were building a dual core computer with a 7600GT or something, you know?
Just my opinion, others will see things differently - I'm all about the balance. If you want to go with 2GB's, find the best deal you can find on 2GB of DDR2 533 or 667Mhz ram.