im not an expert in this yet, but ill give a stab at it.
it isn't about how much memory you have, its about the memory bandwith.
say you have a pipe this big ( memory bus)
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and you need to stuff texture this wide through it ( the wider the better looking )
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well, you can either lower the quality of the texture ( which would lower the width ) or you can compress it so it fits.
if you choose to compress it, you are taking a more complex picture than normal which requires more processing power and compressing that, which requires even more processor power ( hence slower fps ).
EDIT:
hence the term "bottleneck". each video card has a certain sized pipe, and each cpu has a certain sized pipe. the system can only run at the speed of the smallest pipe, the better the graphics chipset the bigger its pipe, the faster the cpu the bigger its pipe is