I run just fine with 1 gig (everything including all games at 1280x1024) but I openly admit I'd probably run even better with 2. I don't personally think the difference would be very noticeable unless I used some very fast RAM with low timings or if I were trying to run several background apps at once or another game. I've tried running Heroes of Might and Magic 5 while having Everquest running in the background and sometimes it works nicely, but occasionally I get stuck in a huge RAM swap from the paging file on the hard drive that turns everything to garbage. How often do you need two games running at once though? 😛
When making a gaming rig, I say the more RAM the better, but this should generally take a back seat to your video card. I've also found it depends on the games you play. If you're playing FPS with a few people, concentrate more on your video. If you're playing Battlefield 2 with a ton of bots, you'll notice big performance gains from more RAM. More RAM generally decreases level loading times as well. As a general rule, if you're trying to run a game with a ton of effects but few computer controlled characters moving on screen, you'll benefit less from more RAM than if you're playing a game with several characters that the computer has to control and/or big expansive worlds with a lot of stuff happening in the background like SimCity 3K.
I had a friend running SimCity3K with 512 RAM and it was achingly slow. He upgraded his video card and this had almost no effect. Finally he called me and I told him to slap more RAM in there. Instead of getting 2GB total, he just bought another 512 but this still showed a HUGE improvement in the responsiveness of the game.
All things being equal, I'd say over 2GB, you'll start to see a large reduction in the effects more RAM will have on your experience. With Vista and DX10 coming soon however, we can hope Windows PCs will be able to take better advantage of anything higher than 2GB.