On the memory issue, it's a tough call to make. At this point in time I'd tend to recommend the 128 MB card for the price savings. Future games may very well need 256 MB of graphics memory to run at high resolutions with antialiasing turned on, but by then faster cards will certainly be available.
The Radeon 9800 Pro 128 MB card is probably the way to go for a high end card at a somewhat reasonable pricepoint. The Radeon 9800 XT (which is a 256 MB card) is now available but is still very expensive. For a bit less money, the Radeon 9800 128 MB (standard) can be found for around $250 and offers 90% of the performance of the Pro. (Beware of the SE version of the 9800, which is much slower.)