You will get more bang for your buck, look at the home 1505, and the small business 6400. They are the same unit, just sold via different channels.
Some things to keep in mind...
1) You can get a 4 year maintenance plan from Dell, for a good price. For school I would recommend getting the complete care. This will even cover your screen if you drop your system and it breaks.
2) Once you get a price on-line, or via a deal site. Give Dell a call, the operator will almost always be able to beat the price that you have gotten.
3) For school, unless you are going into IT, XP Home or MediaCenter will work fine for you. Be for warned there are 5 types of XP, and 10 or 11 types of Vista when it comes out.
4) Get the duo core, it's worth it, and don't skimp on the RAM, Vista will need it. You can run Vista on 512 but it's not fun.
5) Don't get downloaded copies of XP from the internet, it's not worth the headache you will face down the road.
6) Don't forget you qualify for student/teacher software from MS
7) Dell offers discounts to students, give them a call and see what level you will get.
If you want some more info drop me a PM I will answer any question that I can for you.
Just as an FYI, I am factory Certified on all Hardware (desktop/laptop/server) from Dell, IBM, HP (Compaq), Toshiba, and even Sony (run away, run away). I have too many years experience in the IT field to talk about, and I teach A+ courses at the local CC. IBM has had good laptops for the last 7 or 8 years, however I am not sold on the Lenovo brand, and their support has dropped. Run away from Sony, just run away. I know some that love their DeadCow laptops, but I just can't recommend those to anyone.
Two good discount sites:
they have a dell on the front page right now for $749 with free shipping...