I personally would like to see more RAM. 256 Meg is ok for a simple internet computer and some word processing nowadays. With MAME using all the resources it has available I would recommend putting in 1GB of RAM if you plan on using one of the more recent versions and ROMs. I would also recommend a slightly larger HD. 20GB is hardly large enough for the OS and MAME with a full set of ROMs and that doesn't include the CHD files needed for some.
If you plan on using a select set of ROMs and an ealier version of MAME then this should do fine but I would still upgrade the RAM.