If it's anything like my 17" iMac (which I highly suspect), then there is a user accessible slot on the bottom that is VERY easy to deal with.
If you have the manual that came in the box, take a look at that. If not, (from memory):
Unplug peripherals and shut down.
Place iMac screen down on a towel / soft surface, so that the bottom of the round base is laying on it's side.
Unscrew the 4 captive screws on the base, pull to remove.
You should see a RAM slot and an airport card/slot. (with only 256 from the factory, the RAM slot should be empty)
Touch some metal on the inside of the case for static discharge.
Unplug the power cord.
Insert new RAM into slot and reverse the disassembly.
There is a second slot inside the dome, where your 256 factory RAM is installed, I've never dealt with replacing that myself, but from what I hear it's do-able but complicated.
Hope that helps
EDIT: IMHO More RAM always helps, and OSX really perks up going from 256 to 768MB or higher (Made the jump on three machines, always a good idea)