I know DDR5 is faster (higher frequency) than DDR3. In an average system(less than $800) for non high-end gaming, is there a big difference between 2 GB DDR3 and 1 GB DDR5 GPU's?

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Most GPUs over $100 have GDDR5 RAM which is what I would recommend for any kind of gaming. The faster memory is much better and you can get 2 GB GDDR5 card for ~$150 with the R7 260X/265 and the GTX 750 ti.

EDIT: Good video for you - Budget Graphics Cards

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