The optimum setting depends upon how you use your system and what Graphics Card(s) are present.
For general work, you want the highest setting that leaves room for all the DOS Boxes you might want.
If you do a lot of transfers to USB Keys or cards, you probably want a low setting.
I noticed the setting. That combined with your VMM.VXD update, breaks my RAM Limitation Patch. Since you did not add the setting to SYSTEM.CB, my Computer crashed when I went into Safe Mode after installing the SP.
Since Windows 98 will not boot if the setting is not there or the RAM Limitation Patch is used, there is no need for you to set it. In addition, many people set it a little higher, closer to the actual limit around ~1150MB. The actual limit can vary a few MB depending upon configuration.