Should I spend the additional $300 for 528 by storage on Mac air

That's up to you. No one here can know your data use requirements.

If your workflows are predominantly text based. or online, then the 256GB might be ample.

If your workflows include lots of images and video that you need to have accessible (e.g you're a video editor), then the 512GB might not be enough.

If your workflow is mainly at your desk, with limited portability, you may find the built-in 256GB is sufficient, with additional near-line storage (e.g. a RAID array) at your home station.

So its only something you can answer, based on your expectations on how you'll be using the system.

It depends upon how you use your computer. For me, even 500 GB is too little, but the added cost means that I would likely start using external storage as a solution so the small internal drive would suffice for booting and running apps.

If you think you will need the addition space for your data, sure.