I am not sure why it keeps doing this though?
Umm, because your computer is seriously underpowered? Sorry, but it's simply inadequate. You barely have any RAM to run PS properly and your intel graphics just doesn't cut it. They always have been problematic and much more so in your environment, where no doubt the shared memory is furtehr subtracting from your measly memory outfit, it's even more severe. Sorry to say so, but unless you get a more powerful computer, this will probably never work. You can of course try to update your graphics driver, but I doubt it will make much of a difference....
Today I would recommend the VisionTek ATI Radeon HD 7750 1GB GDDR5 card. At a hair over $100 it's a good value, delivers quite good performance, and doesn't draw an undue amount of current from your power supply.
If your budget and power supply can handle a bit more, the more powerful VisionTek ATI Radeon HD 7850 and 7870 cards with more GDDR5 RAM would be worth considering. I'm personally fond of the VisionTek brand because all the cards I've gotten from them worked 100% perfectly throughout their lives.
Photoshop would love as much RAM as you care to give it. My current workstation has 16 GB, and I do sometimes crave more. If I were building a brand new machine today I'd put at least 48 GB of RAM in it, if not more. Your current machine may have limitations - what brand/model is it, and do you have documentation showing the max RAM it can support? You'll need this detailed info to determine what kind of RAM to get.
By the way, if you have to replace the RAM you have already in the system, rather than just add more, and if your computer can support it, I recommend ECC RAM because it will correct errors and not allow the system to run with uncorrectable errors.