Between those two rigs, I'd stick with the P4 3.06 - the faster single core CPU will perform better for MAME, and paired with a matched set of DDR ram (to take advantage of the dual channel memory option) you should be able to run Hyperspin OK.
Sure the dual core CPU might be better (and newer) for some things, but MAME's activity is still mostly single threaded. I don't think the MAME devs are taking advantage of dual core processors yet.
The 3.06 HT will run hotter, though, make sure you have adequate cooling. My P4 3.2 HT would reboot constantly until I completely decased the mobo, mounted it to the side of the cab, and put a more robust fan on it. Use Arctic Silver for the heat sink if you have it.
Yes, 2 gigs of DDR 400 RAM will run you about $50-75, used. New, probably closer to $100. Why is is more expensive than newer RAM? Supply and demand. Boards supporting DDR400 RAM had a max capacity of 2 gigs, so that's the top end of that technology. Thus, it's commanding top price. eBay should be a good place to look.
Have you tried running Hyperspin with 1 gig of ram on that setup?