There are two main types of ram in your system. The actual computer ram, and video card ram.
The short answer to your question about computer ram affecting FPS, is probaly yes. The more computer ram you have, the faster your computer processor is able to deal with data.
Your processor is able to deal with a certain number of commands at a time. Ram gives your processor a place to store that processed information while it goes onto the next task. the more ram your computer has, the faster the processor can move onto the next thing. That means that theoretically, the processor will be able to process video data to the video card faster. Thats a little bit of an oversimplification, but it will work for the moment.
Video card ram does the same thing as regular ram, but only for your video card. A video card is basically just another computer processor that only deals with graphics. raw graphics data comes fromt eh computer program or game, via the system processor, where it comes into the video card. The video ram acts as a buffer, allowing data to sit temproarily while the video card processor processes. having more ram on your video card does help your system, but not in the same way as regular computer ram will. For example, with just running regular windows, you won't see much of a difference between a 4mb and a 256mb graphics card. When you get into somethign that uses alot of graphics, like a game, you will see a huge difference.
My advice, if you are thinking of upgrading one or the other, is to get the video card with more ram. System ram is dirt cheap these days and easy to install, so you can always upgrade later, and unless you are only running 128mb computer ram or something, a video card will give you a much better gameing for the money expericamce.