Does Google Sketchup 7 use hardware acceleration?

"Yes, SketchUp can take advantage of hardware acceleration.

In SketchUp navigate to the Window menu.
Click Preferences -> OpenGL
Check Use hardware acceleration and hit OK.

A better video card will definitely improve performance. SketchUp is highly dependent on GPU power. From the words of Google:

We recommend any graphics card that
fully supports OpenGL 1.5 or higher
and has at least 64 MB of video
memory. If you're going to create
large models, we recommend a graphics
card with more than 64 MB of video
memory.

For more information see Which graphics cards are recommended for SketchUp?"