Local Graphics Memory
The memory on the graphics card has a profound impact on performance. However, different aspects of the memory have different impacts on performance.
Graphics Memory Size
The amount of video RAM is probably the most overrated part of a graphics card. Uninformed consumers tend to use the amount of RAM on a card to differentiate it from other cards, but in reality the amount of RAM has a very small impact on performance when compared to other considerations like clock speed and the memory interface.
Generally speaking, a card with 128 MB of RAM will perform almost identically to a card with 256 MB of RAM in most situations. There are situations where more RAM is advantageous for performance, but it is important to keep in mind that more RAM does not automatically translate into more performance.
Where RAM does come in useful is for higher-resolution texture sets. Game developers often make multiple texture sets for their games, and the more RAM your graphics card has, the higher resolution textures you will be able to use. Higher resolution textures provide clearer textures in the game. Having said all this, it is still common sense to choose a card with the largest amount of RAM available, but only if all other considerations are equal. Still, the memory bus and memory clock speed are far more important performance factors than the total amount of physical memory on the card..
The memory bus is one of the most important aspects of memory performance. A modern graphics card's memory bus can range from 64 bits to 256 bits, and in some cases, it can be 512-bits wide. As the bus width increases, so does the amount of data that it can carry per cycle, and that is very important for performance. For example, if you had two buses running at the same clock frequency, a 128-bit bus could theoretically carry twice as much data as the 64-bit bus per clock cycle and a 256-bit bus can carry four times as much.
Higher memory bandwidth (channel capacity in terms of bits per second) equals higher memory performance. This is why the memory bus is so much more important than the amount of RAM. Assuming identical clock speeds, memory on a 64-bit bus practically works at only 25% of the speed of memory on a 256-bit bus!
Considering the amount of RAM, note that a graphics card with 128 MB of 256-bit memory would have much higher memory performance than a 512 MB model with 64-bit memory. It is notable that some of ATI's X1x00 series graphics cards will advertise their "internal" memory bus specifications, but the "external" bus is the number of note. For example, the X1600 has a 256-bit internal "ring bus," but the external bus is 128 bits. In reality, the memory bus performs at 128-bit performance.