<p>Is there any difference between having 4 .5GB memcache servers running or one 2GB instance? </p>

<p>Does running multiple instances offer any benifits?</p>

High availability is nice, and memcached will automatically distribute your cache across the 4 servers. If one of those servers dies for some reason, you can handle that error by either just continuing as if the cache was blank, redirecting to a different server, or any sort of custom error handling you want. If your 1x 2gb server dies, then your options are pretty limited.
The important thing to remember is that you do not have 4 copies of your cache, it is 1 cache, split amongst the 4 servers.
The only downside is that it's easier to run out of 4x .5 than it is to run out of 1x 2gb memory.