I have a 256MB 8400M GS which reports 512MB in the same manner yours
reports double. It looks like the nvidia drivers allocate some system
memory for a cache and show it as the memory there. If you do a lspci -v
it will show the actual memory on the card like this:

Memory at d0000000 (64-bit, prefetchable) [size=256M]

My Xorg.0.log says:

(--) Oct 04 19:02:07 NVIDIA(0): Memory: 524288 kBytes

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Nvidia driver detects VRAM incorrectly
https://bugs.launchpad.net/bugs/363135
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