Personally I would recommend that you simply get a new laptop if you want to waste money on Vista
Thats mainly because 90% of the reason Vista is any good (in my opinion) is that it looks sexy, and has Direct X 10. Stick with something like XP if your going to use a laptop with those specs.
My recommended specs for a pleasant Vista experience:
Intel Core 2 Duo Processor (2.0 Ghz recommended)
1 Gig of DDR2 RAM
Dedicated Graphics Card (ATI X1600 or NVIDIA 7600 Recommended)
80 Gig hard drive
That right there will give you a pleasant experience even with Areo. If you had the specs above I would go with Premium. With what you have right now, I agree with Makaveli213, go with Home Basic.