The 2.0 is fine... It comes down to an economical choice.
The 2.66 is a mch better deal than the $300 you are saving going to the 2.0
So to me, I think it is foolish to get the 2.0. Also, you can get Ram cheaper elsewhere and install it yourself.
Ram prices are high right now as well. Not just for the Mac Pro, but everything has gone up a bit. You may want to wait it out a bit for prices to fall.
If you are using UB apps 1GB will get you through for a while.
If you want to cut some cost move down to the 160GB HD and add another drive later. The $70 downgrade is enough to get you a decent size drive then you would have two.
You will be happier with the 2.66, plus it will resell better than the 2.0.