Synchronization by itself would be enough in this case if the first check was within synchronized block (but it’s not and one thread might not see changes performed by another if the variable were not volatile). Volatile alone would not be enough because you need to perform more than one operation atomically. But beware! What you have here is so-called double-checked locking – a common idiom, which unfortunately does not work reliably. I think this has changed since Java 1.6, but still this kind of code may be risky.
EDIT: when the variable is volatile, this code works correctly since JDK 5 (not 6 as I wrote earlier), but it will not work as expected under JDK 1.4 or earlier.