The video ram of the onboard video "G" comes from the system ram. If you have 256mb system ram you will definately notice a perf hit
Video performance may be less depending on what you are using the system for, if strictly 2D graphics and internet surfing the performance benefit from going to a AGP card would be little over a more 3D oriented card. For 3D gaming a AGP card is the way to go.
If you have no intention of the using the onboard VGA feature you can disable it in the Bios and use an AGP card, and the system should perform as a 8IPE1000 Pro would.