I have been researching video cards lately and I am searching for the best bang for the buck. I know many stats can be misleading to sell cards on.
My question: Is there a significant increase in performance of DDR5 over DDR3 that I should exclude DDR3 cards from my search?
Dont exclude DDR3 cards from your search, there are many DDR3 cards that are good, especially in the $100 and below segment. The memory only minimally affects performance, the GPU itself is far more important than GDDR3 or GDDR5.
GDDR5 is quad pumped so its transfer rates are twice as high as DDR3, so if a GDDR5 card has a 128 bit bus and a DDR3 card has a 256 bit bus their memory bandwidth will be basically identical.
You simply should not be choosing a card based on memory type(unless it is actually the same card with different options.) The things that really matter are price and performance. Picking one technical aspect that goes into how well a card performs and giving it undue importance isn't going to help you make the best decision.
If you are searching for a video card, comparing memory type tells you nothing. Absolutely nothing. It's like basing what kind of new car you are going to buy by how many windows it has. No relevance at all, really.