1200MHz - 1330MHz is a jump of 130 MHz, or just over 10% increase.
For the price, you'd be better off with a 1.2 with an extra 256mb or 512mb of Ram.
The increase in speed would be hardly noticeable.
At the time i bought mine, the iBook 12" was 1.2 and the Powerbook 12" was 1.33, so i decided on the iBook plus 1Gb of Ram, which is super speedy!
Now of course it's 1.5 on the Powerbooks, so i'd almost say that if you could afford it, get the 1.5 Powerbook.
If not, get the 1.2 iBook and 256/512 mb of RAM.
Ps. a CPU Drop in kit is basically a replacement processor for your computer. This is not possible on the notebooks, as they soldered in, but i believe you can buy them for the powermacs and some imacs. This means your mac can be made to perform better by just changing your CPU, allowing you to keep everything else.
Only ram, airport and HDDs are upgradable on the notebooks.