basic rules about the Crossfire, both cards must be same model, if you got 2 6950 yes you can do Crossfire, now, if one is 1gb, BOTH will be running at 1GB, but since you are using only one monitor more than 2x 1gb is not necessary...
If you use one card on a slot 4x you will YES lost performance, and a lot, here you can look at some graphics:http://www.tomshardware.co.uk/pci-express-scaling-p67-chipset-gaming-performance,review-32164-10.html
about the PSU, what is the psu brand? if it is a good brand you can go for SLI, but some psus say that have 700w but under stress they can't go over 500w, so you must first see some reviews about your psu before Crossfiring with this one, i'd say you can do it but it is very risk.
basically yes, the performace will be higher ifyour resolution is 1080p or less, more than 1gb Vram will not be noticable, but with 2 cards in SLI yes, you will get a good performance boost