Yes, the 128MB is fine for you. 256MB becomes useful for Aperture/Motion users, or users who will have lots of virtual desktops in Leopard.
The glossy vs matte issue is clear as mud; it is entirely a personal preference thing. People will go on for hours about how glossy killed their dog or matte got their girlfriend pregnant. Do you want richer colors with the chance of glare in some environments, or flatter colors with the chance of washout in some environments? If there's an Apple Store or Mac store or Apple mini-store (within BestBuy, CompUSA, etc) I'd go and look at both for a long time.