Some points:
A lot of the newer games will start to make jump into 128MB buffers, especially if you run them with full texture detail. Games like Half Life 2 and especially Doom3 (a very texture intensive game from what I hear) should warrant at least a 128MB videocard.
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That AIW 9800 should suit very, very well for just about anything that is coming out in the next year, including HL2. ATI is Valve's card-of-choice, so if you want to play HL2, youre in the safe as far as performance goes.
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I would hardly consider a 256MB card a "waste" but I would never pay much of a premium to get one. ($100 premium is too much for such little gain.)
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The AIW 9800 will not only let you run the top games pretty much as fast as theyll go, but it will add other functionality to your computer as well, such as a TV tuner and DVR functions.
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By the time anything comes out that will make your AIW 9800 fill out completely (AKA: Become bogged down, or laggy), it would probably be time for an upgrade anyway. That card should have major staying power and should be one of the longest lasting parts of your computer system.
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(from ATI.com product comparison)
ATI Product Comparison
(bold means AIW 9800)
(plain text is 9800 pro)
Product Name
RADEON 9800 PRO 128MB
ALL-IN-WONDER 9800 PRO
ASIC
RADEON 9800
RADEON 9800
SMARTSHADER™
2.1
2.1
SMOOTHVISION™
2.1
2.1
FULLSTREAM™
Real, DivX
Real, DivX
Adaptive De-Interlace
VIDEOSHADER™
VIDEOSHADER™
HYDRAVISION™
Yes
Yes
Clock Speed (MHz)
380e/680m
380e/680m
Pixel Fillrate
3.04 Gpixels/sec
3.04 Gpixels/sec
Geometery Rate
380 Mtriangles/sec
380 Mtriangles/sec
Bus Type
AGP 4X/8X
AGP
Power Requirement
300W
300W
Memory Amount
128
128
Memory Type
DDR1
DDR2
Memory Interface
256-bit
256-bit
VGA
Yes
No
DVI
Yes
Yes
YPrPb Out
w/adapter optional
Yes
S-Video Out
Yes
Yes
Composite Out
w/adapter included
Yes
Audio Out
No
Yes
SP/DIF Out
No
Yes
S-Video In
No
Yes
Composite In
No
Yes
TV Tuner
No
Yes
FM Tuner
No
No
Dual Display
Yes
No
HDTV Capable
w/optional adapter
Yes
REMOTE WONDER Included
No
REMOTE WONDER
Hardware MPEG Encode Assist
No
Yes
EAZYLOOK
No
Yes