Available frame-buffer RAM may limit the resolution you can achieve on color or gray-scale displays. It probably isn't a factor on displays that have only two colors, white and black with no shades of gray in between.
For 256-color displays, a byte of video memory is required for each visible dot to be shown. This byte contains the information that determines what mix of red, green, and blue is generated for its dot. To get the amount of memory required, multiply the number of visible dots per line by the number of visible lines. For a display with a resolution of 1024x768, this would be 1024 x 768 = 786432, which is the number of visible dots on the display. This is also, at one byte per dot, the number of bytes of video memory that will be necessary on your adapter card.
Thus, your memory requirement will typically be (HR * VR)/1024 Kbytes of VRAM, rounded up (it would come to 768K exactly in this example). If you have more memory than strictly required, you'll have extra for virtual-screen panning.
However, if you only have 512K on board yor video card, then you won't be able to use this resolution. Even if you have a good monitor, without enough video RAM, you can't take advantage of your monitor's potential. On the other hand, if your SVGA has one meg, but your monitor can display at most 800x600, then high resolution is beyond your reach anyway (see Using Interlaced Modes for a possible remedy).
Don't worry if you have more memory than required; XFree86 will make use of it by allowing you to scroll your viewable area (see the Xconfig file documentation on the virtual screen size parameter). Remember also that a card with 512K bytes of memory really doesn't have 512,000 bytes installed, it has 512 x 1024 = 524,288 bytes.
If you're running X/Inside using an S3 card, and are willing to live with 16 colors (4 bits per pixel), you can set depth 4 in Xconfig and effectively double the resolution your card can handle. S3 cards, for example, normally do 1024x768x256. You can make them do 1280x1024x16 with depth 4.