What happens if i return before the end of using statement? Will the dispose be called?

Yes, Dispose will be called. It's called as soon as the execution leaves the scope of the using block, regardless of what means it took to leave the block, be it the end of execution of the block, a return statement, or an exception.

As @Noldorin correctly points out, using a using block in code gets compiled into try/finally, with Dispose being called in the finally block. For example the following code:

using(MemoryStream ms = new MemoryStream())
{
     //code
     return 0;
}

effectively becomes:

MemoryStream ms = new MemoryStream();
try
{
    // code
    return 0;
}
finally
{
    ms.Dispose();
}

So, because finally is guaranteed to execute after the try block has finished execution, regardless of its execution path, Dispose is guaranteed to be called, no matter what.

For more information, see this MSDN article.

Addendum:
Just a little caveat to add: because Dispose is guaranteed to be called, it's almost always a good idea to ensure that Dispose never throws an exception when you implement IDisposable. Unfortunately, there are some classes in the core library that do throw in certain circumstances when Dispose is called -- I'm looking at you, WCF Service Reference / Client Proxy! -- and when that happens it can be very difficult to track down the original exception if Dispose was called during an exception stack unwind, since the original exception gets swallowed in favor of the new exception generated by the Dispose call. It can be maddeningly frustrating. Or is that frustratingly maddening? One of the two. Maybe both.

using statements behave exactly like try ... finally blocks, so will always execute on any code exit paths. However, I believe they are subject to the very few and rare situations in which finally blocks are not called. One example that I can remember is if the foreground thread exits while background threads are active: all threads apart from the GC are paused, meaning finally blocks are not run.

Obvious edit: they behave the same apart from the logic that lets them handle IDisposable objects, d'oh.

Bonus content: they can be stacked (where types differ):

using (SqlConnection conn = new SqlConnection("string"))
using (SqlCommand comm = new SqlCommand("", conn))
{

}

And also comma-delimited (where types are the same):

using (SqlCommand comm = new SqlCommand("", conn), 
       comm2 = new SqlCommand("", conn))
{

}

Your MemoryStream object will be disposed properly, no need to worry about that.