Ariiiight, to clarify a couple things.
It means 512mb of VRAM, as in for your video card not system RAM because it uses over 500mb of texture like it says in the warning.
No this doesn't mean you HAVE to have a 512mb card, it's just saying it would be optimal if you had that.
The worst that happens is at first it seems a bit choppy, but if you have a 6800GT or Ultra, especially a GT at Ultra speeds, and a 1gb of system RAM with your aperture set to 256mb it will be able to play Ultra settings no prob.
I play Ultra at 1280x1024 Resolution, 2x AA with my GT at Ultra specs and my AGP Aperture at 256mb and it plays perfect.
When I first load it up though the first couple mins are choppy which I attribute to low memory bandwidth in a socket A system, but AMD64's shouldn' t have any trouble and even on mine, after the first couple minutes it's smooths out nice like