In every generation, there are three memory configurations strapped to the current GPU:
1. The right amount
2. Too little
3. Too much
This has been true since the original Voodoo video accelerators, and continues to be true today. Please note that any amount applies to games / 3d work, any HTPC is unaffected by the amount of RAM on a video card at this point.
For the current generation of GPUs, 128 MB is the right amount. It is the perfect balance between maximal graphical detail, ala texturing, and the maximal amount of work the actual GPU can handle.
256 MB is too much. The only game to actually offer a mode to 'tax' the full amount is Doom 3, and aside from having uncompressed textures, the benefit is zero. The reason is that because even significant compression is so good that there is a marginal perceptible difference between raw textures and compressed textures up to 8:1. The only way to improve visual quality, aside from using 2048x2048 32 bit textures is to increase the amount of 'layers' you add, like a specular map, bump map, environment map, etc. With 8x1 architecture, you'll be capped well before you have an opportunity to use that much texture data.
64 MB is not enough, well because at that level, using standard sized textures (1024x1024) is challenging. When you reduce the image size, you will lose significant quality on larger objects, especially up close. You may even have to force 16-bit textures and when you do multiple layers, compression and blending artifacts will show up at lower precision. That said, while 64 MB can get the job done, the GPU is not being used to its full potential.
For an HTPC, a 64 MB board would be more than sufficient. Anything else is mostly for gamers.
