How Much RAM Do I Need?
There are two things you should consider when looking at video cards with different amounts of RAM. The first is the resolution you play games at, and the second is the video card you're looking to buy.
For current games, 512MB of RAM is more than enough in nearly all situations. Only gamers looking to play on a 30" monitor should worry about more, although those playing on 24" monitors should be aware that their cards may run into limitations due to RAM in a year or two. If you're playing on a monitor smaller than a 22", 256MB will be perfectly suitable for your needs.
However, no matter what the native resolution of the monitor you're playing games on, you should also seek to balance the amount of RAM that is on your card with the performance of the card. As mentioned, RAM does not increase the speed with which the card can render frames. This means that you should avoid a card with low-performance GPUs paired with heaps of RAM. For example, it is possible to buy a Geforce 9500GT with 1GB of GDDR2 RAM, despite the fact that the Geforce 9500GT's GPU is not fast enough to even produce a frame-rate high enough to require that much memory.
Video Card RAM is a balancing act, but when in doubt, you're typically better off buying a card with less RAM than one with more. By and large, the promotion of video card RAM is driven by marketing, not by actual performance. The only exceptions are those cards which are actually powerful enough to drive very large displays, like the Radeon 4870 or the Geforce GTX260 - and even in those instances, the versions with additional memory are only worthwhile if you're pairing them with an extremely large display.