Your laptop is fine, the onboard 64mb graphics chip is using it's allocated system memory because it doesn't have any of it's own, so it borrows from the main memory. Your probably better of sticking more memory in anyway, and 256 or 512 should see it along nicely.
My 4 year old Toshiba notebook had 256Mb Ram. I recently considered increasing it to 512Mb, but was put off when I found that both memory slots were already occupied with 2 x 128Mb.
Having been told that I would need 2 x 256Mb I felt that the cost, (around £130), of replacing all my present memory was not worth it. I decided to put this towards a new, up-to-date, notebook, many of which already have 512Mb of memory.