If you get a dedicated video card its basically like getting a new stick of ram in. Not a large stick, but one none-the-less. Onboard graphics use your ram as video ram I believe, but if you throw a new video card in there and another 256 or 512 stick you should be golden. If you get new ram try to match it to your old ram so you don't run into any problems.
I've also heard from people that 256 runs windows XP fine but 512 runs it quite a bit quicker.