Yes! Mac OSX loves RAM and so does Premiere. Max out the memory if performance is important to you.
Do you "need" 8GB or 16GB? As others suggested, best thing to do is look at memory usage during actual usage. Without upgrading, it might be hard to tell but give it shot. A couple nice articles about OSX memory and performance might be worth reading:
Problems with lack of memory in OSX & OSX Performance Tuning
I couldn't find a definitive answer, so please verify, but I think you can add 2x4GB SO-DIMMS giving yourself 12GB. That would let you upgrade without having to throw away your upgrade later if you do upgrade to 16GB. Unfortunately, there is currently a significant price premium for the 4GB SO-DIMMS.
Lastly, if you have the GeForce 9400M version of the 21.5" iMac, chances are good you'll see a large boost from 8GB since your video is sucking up system memory.