Keep the 512MB. You might also want to consider bumping up to 2GB by replacing it with another 1GB, and then running in dual channel to take advantage of the small performance boost it offers. Vista runs well with 2GB, and since you are already allocating 256MB to your graphics, you probably should upgrade. But yes, keep the 512MB stick in there for now. No harm in doing that.
Also, off-topic, but I don't think your signature is correct. "DEDICATED" should probably read "SHARED", as there aren't any 1100's in laptops with 256MB dedicated VRAM.