OCS/ECS games are indeed playable on an A1200, but it also plays AGA games as well. There are incompatibilities with a few games and KS 3.1, but those are usually fixed by patches, etc. However, as you said, it's easy to emulate an Amiga on a PC, and for games, the A500 is still King, it just means you need disks :-)
That card should boost your ram to 9mb, but beware - it uses the same slot as the A500 HDD and the A500 CD-ROM. If neither of them matter, go for it, but I don't know whether you will get much use out of that 9mb without a hard drive. You can get something along the lines of an ADIde interface that sits under the CPU (IIRC) and gives you an IDE port, that may be the best thing to look out for. Apart from that, I'm not sure. But if you're only playing games, I don't even know if you'll need the ram expansion, not that many OCS/ECS games require more ram as far as I know.