The 8M is not the video RAM - it's a fixed fram buffer. It's not upgradeable.
The system will use system RAM for video up to the maximum depending on the load on the system - that likewise is not user-adjustable.
No, it's not the same for all operating systems.
See about the differences for XP and Vista in this document section "Dynamic Video Memory":
Ubuntu in the current versions (hardy, intrepid) use 256MB video memory. You can check this by browsing /var/log/Xorg.0.log. At the moment the amount of video memory is taken statically in Ubuntu/Linux, but this might change in future versions.
It is able to run many good games, but 8MB is going to run almost nothing.
Well, you probably figured out in the meantime Vista uses up to 384MB of main memory as video memory.
Still - you won't have much fun playing games with this chipset. Anway, there's a tweak for more performance with other games. It involves switching from HW T&L -> SW T&L in order to go from 6 to 8 Execution units inside the X3100 chipset. Anyway here's more information:
This will give increased performance for older games.