yes
The data that cannot be stored locally in VRAM is transferred to system memory where you will incur large latency penalties across the board. Technically the only penalty incurred should be fps losses, but a typical symptom you'll probably encounter is stuttering caused by texture swapping from the system RAM to the VRAM, generally known as cache thrashing. This takes place because textures needing to be displayed on screen obtain absolute priority, so if a texture needing to go on screen is currently being held in system RAM it will need to be moved to the video card ram before it can be displayed. Like I said, technically this should not happen, but inefficient memory management in many game engines guarantees the stuttering issue a common one.
The only cards that can run higher resolutions with a tons of textures and run them smoothly for very demanding applications as simulators must have a good amount of Vram, Cards with 1 GB is a must or SLI..