Hello, welcome to the forums.
You've already made the purchase so asking if it was a good deal is a little too late.
Personally, it's a pretty good deal if you got a iPod Touch in the process.
Q: Should I upgrade to 4GB?
A: Well depends on what you do on the notebook. If you work with a lot of photos or edit video, you'll definitely want the 4GB. During normal use (e-mail, web surfing, iTunes, etc.), you won't see a large performance increase. That being said, if you have the cash and find a 4GB deal (Newegg is a good place to start) go ahead. You'll see small improvements in speed.
Q: Does regular Microsoft Office 2007 work with Snow Leopard?
A: No, Office 2007 is the PC version. You have to get Office for Mac 2008.
Q: How do I bootcamp into Windows 7?
A: Use the Bootcamp utility located in the "Applications\Utilities" folder. You may want to check out the "Windows, Classic, Linux, and Other OS" section of the forum.
Q: Which is better Bootcamp or VMWare?
A: Depends on what you plan to do in Windows. For gaming, you really want to use Bootcamp. If you don't mind low settings in games or use Windows strictly for Microsoft Office or other programs that aren't so performance intensive, you may want to consider VMWare since you can use Mac and Windows at the same time!
Q: Would 160GB HD be enough?
A: Again, depends. Video editing and photo editing take a lot of space really quickly, in which case 320GB or an external drive should be purchased. But normal use should be enough. I suggest just using it for now and purchasing one later if you need one since the prices for hard drives can only go down in general.