You can get to 3GB of RAM in dual channel mode by having 4 modules, 2x1GB and 2x512MB.
Other than that, Paparazi's concerns are the biggest question.
Regarding your friends comment, the front side bus is the connection between the CPU and everything else in the PC. The northbridge chip (usually just the memory controller, but also the AGP controller in older systems) hangs off of the FSB, and the RAM hangs off of the memory controller. The southbridge chip also hangs off of the FSB, which includes PCI and PCI-E buses, USB connections, SATA, etc. All of these devices share the bandwidth of the FSB. That's why increasing the FSB can provide a significant increase in performance, because the bus will have more bandwidth available and face less congestion.
The biggest consumer of FSB bandwidth is CPU <--> memory communications. If you have two cores on a CPU with a 1066 MHz FSB, then the FSB is going to limit the ability of the CPUs to process at their full potential. If you put four cores on a CPU with a 1066 MHz FSB, then the amount of bandwidth available per core will be half that of a dual core CPU on the same bus. So it really has the potential to be a bottleneck at lower speeds.
That's the big about FSB.
Now about cores, if you have a quad core 2.4 GHz CPU, you have 4 2.4 GHz CPUs sharing the same 1066 MHz FSB. This is not the same as having a single 9.6 GHz CPU. Applications and the operating system have to be multithreaded to take advantage of the additionaly cores (with each core able to run a single thread at a time). So if you're running 4 threads, they can all run simultaneously on a quad core CPU. On a dual core CPU they two of them would run, then they would swap out for the other two so that they could get some CPU time, then those two would swap out for the first two, etc.
But if you are running only one thread at a time, then you'll have 3 CPU cores sitting idle while one works it's butt off. So in that case it would be better to have a dual core 3 GHz CPU than to have a quad core 2.4 GHz CPU.
So which is better? Most people only run one or two programs at a time. If they do multitask then usually there is one application that has the focus that needs processing while the other applications are sitting idle waiting for direction (i.e., running Word and Excel simultaneously and copying from one to the other). Having dual cores can provide a big boost in responsiveness these days, because modern operating systems are multithreaded. Going to quad cores provides less of a benefit because most people simply don't run that many compute-intensive threads at once, although more and more applications (especially games) are beginning to be written to take advantage of multiple CPU cores.
So there it is, in a nutshell.