Just in case someone stumbles onto my little web page in a search for the Bioshock patch for Shader 2.0, you can find all the info you need over at the patch blog

Kind of amazing that they could get the patch working pretty well in just a couple weeks but the game couldn't ship with it.  Anyway, they suggest it will work on cards like the ATI 9800 series and above (probably the X600, X700, certainly the X800 series.  I haven't bothered to try it because it was only a concern while I was waiting for my new graphics card.  might give it a quick test on the wife's machine and see if a 9600XT can handle it.