Any reason why you single out the 9500 GT 512? I only ask because I was just in my local Best Buy about 30 minutes ago and they had both the 9500GT 512 and the 9500GT 1gig in stock. The 1gig version was only $10 more.
Yes. A 32 bit O/S will only see somewhere under 4Gb (3.25-3.75) of addressable memory. This includes video memory. The system also has to allocate memory to the motherboard and any peripherals installed.
Adding VRAM over 512 in a 32 bit system won't really add much if anything to video performance, which is more dependant on memory speed (bus and clock) than total memory, so all you're really doing is limiting the amount of regular memory available to the system.
BTW, you can get a 9500GT for well under $100 at newegg (closer to $70 IIRC).
[EDIT] I should have added that as long as you're never going to put more RAM in your system than 2Gb then the 1Gb card won't hurt but then I went to EVGA's web site where I saw this:
GPU 9500 GT 9500 GT
GPU Speed 550Mhz 550Mhz
Pixel Pipelines 32 32
RAMDAC Speed 400 400
RAM 512 1024
RAM Type DDR2 DDR2
RAM Speed
1000Mhz (effective) 800Mhz (effective) Memory Bandwidth
16.0 GB/s 12.8 GB/s Max Refresh 240 240
Max Resolution Analog 2048x1536 2048x1536
Max Resolution Digital 2560x1600 2560x1600
Note that with the higher RAM speed/memory bandwidth the 512 card will outperform the 1Gb card.