I'd get the unbuffered non-parity, just because that's probably what they've got in there. But get the machine and match whatever's in there, or if you wanna get the cheapest stuff and they have ECC in there, go ahead and yank the original 256. 1024 will definitely be enough RAM for now.
As far as Photoshop... I had an old Mac license (3.0, I believe), that a friend had given me. His company has a software policy of buying two upgrades and then re-purchasing the product on the third... well, he had bought 4 and 5 and was moving on to 6, so he had all these 3 licenses laying around. I got one, and then bought the Photoshop 7 upgrade ($150).
The other option is to use Photoshop illegally until you can afford it. While it's technically illegal, as long as you're going to eventually buy it, Adobe really isn't going to care. Why? Because it gets you using their product. That's important, because it gets more professionals using Photoshop. If I were a graphic designer doing photo work and my employer said "what are you more trained with, Photoshop or Paint Shop Pro?" - Adobe wants that answer to be Photoshop, 'cause it means more licenses sold.
If you really don't feel comfortable with that (I generally don't steal software either), I can call Doug and ask him if he's got any of the old licenses laying around still. Once you've got that, $150 gets you 7 legally.
Macs aren't cheap, but you're not getting a hunk of junk either. That machine, honestly, will probably last you three or four years (you'll probably want to upgrade the video, but you'd probably want to do that anyway). My Power Mac is a year and a half old and it's still stupidly fast (and gets faster with each OS release, as it becomes more optimized for my hardware). The only reason I'm thinking about getting a new one is because I have insurance money coming to me that I have to spend. But honestly, I still can't even justify that because my Power Mac is just so good.
It's funny that you mention your friends' disbelief, because I went through the exact same thing a few years ago. I used to <b>hate</b> Macs. I'd call 'em "Macintrash", always talking shit about 'em... well, I've seen the light. Apple's hardware is finally something to drool over (for most of the 90's, it wasn't) and the OS no longer sucks ass (I don't care what long-time Mac users tell you - yes, it's convenient and intuitive, but it's not stable at ALL and therefore is stupidly difficult to actually use).
It's different in the Mac world than it is in the PC world, because the hardware doesn't become obsolete as fast. My iBook, which was going on two years old, was still perfectly usable until it got destroyed in the fire.
Also, don't tie the Mac totally to the graphics profession. If you want to get it for that, that's fine - but keep an open mind. If you're anything like me, you'll start using it for just about everything else too. And I <b>like</b> Windows XP.
Also consider the Apple Instant Loan. It's financed by MBNA or whatever that bank is. If you have good credit, you shouldn't have trouble getting approval, and I think you can use it on SmallDog's stuff too. Get the loan, pay it off over two or three years... life is good.
The alternative is to come work at SAIC. We have a two-year interest-free loan for financing 70% (up to $4,000) of a new computer for employees. That's how I bought my Power Mac.