Is it possible to assign more video memory in VirtualBox?

You can do it from the command line. This example will increase the video memory to 256MB:

<~> $ vbm showvminfo WinXP-SP3 | grep VRAM
VRAM size:       128MB

<~> $ vbm modifyvm WinXP-SP3 --vram 256

<~> $ vbm showvminfo WinXP-SP3 | grep VRAM
VRAM size:       256MB

Note:vbm is actually an abbreviation for vboxmanage.

The upper limit provided by VirtualBox is 256Mb, regardless of the capability of your host hardware/GPU.

For example running:

vboxmanage modifyvm MyVMBoxName --vram 1024

Gives this error:

VBoxManage: error: Invalid VRAM size: 1024 MB (must be in range [1, 256] MB)
VBoxManage: error: Details: code NS_ERROR_INVALID_ARG (0x80070057), component SessionMachine, interface IMachine, callee nsISupports
Context: "COMSETTER(VRAMSize)(ValueUnion.u32)" at line 417 of file VBoxManageModifyVM.cpp

Would be great if there was a way to assign more video memory to a VM as my Win7 use is pretty extensive e.g. for Photoshop.

go to your virtual machine display properties and put monitor count at max; this will also give you the max ceiling for video memory just above it. go on and move your slider for video memory all the way to max and ok it. start your virtual machine. let your virtual machine run for a few minutes then shut it down. go back into the virtual machine display properties and bring monitor count back down to one. video memory will remain at max level from now on.