Are the newer FX-IIIs a big step up from the M8 version and what would a fair price be for an M8 in like new condition? Also how would one compare to a VX-III 2.5x8? Thanks and Merry Christmas!

Second hand but fwiw yes they are, by accounts I have seen, a step up. A BIG step????? Can't say a fair price for a used M8 but one just sold on Ebay for $200 and that is an absolute steal. The FXIII improvements over the others are index matched lens coatings. The FXIII has click adjustments like the VXII whereas the M8 has friction. Leupold's website has a contadiction as to whether these clicks are 1/8 or 1/4 moa. On the M8 models the 6x42 used better coatings than the 6x36 but their website is not very forthcoming as to the differences between an FXII and FX III other than objective size. I prefer the fixed 6's for their ability to be constant (mag, eye box and exit pupil etc..) but that VX you mention has a huge following and would be one of the first I would look at. Not a bad scope in your choices.

A big step ? Well, frankly, I seriously doubt the Index Matched Lenses in the FXIII are going to give you anything you can really see over the fully multicoated 6X42's. However, I understand that some of the early 6X42's were single coated. If that is the case, there would be a noticable difference. Particularly when it comes to dealing with flare. My single coated 4X Leupolds will show a little flare when point toward the low sun. My fully multicoated one shows nothing more than some washed out colors.
My fully multicoated 6X42's have after market target style elevation knobs. Frankly, I'd prefer the lower profile finger tip adjustments with zero pointer that the new FXII's have. I've never had any issues with the so called, inferior friction adjustments.
The difference between it and the 2.5-8X36 would be better really dark night perfomance, but I wouldn't expect any better twilight performance. Due to the large eye box of the 2.5-8X36 at the lower magnifications, if you use it at those magnifications, both feel just as fast on the target. The 6X would allow you to do so at 6X were as the 2.5-8X36 would be set on say 2.5X to maybe 4X.
Last of all, the new FXIII's come with electroform reticles which are suppose to be stronger than anything else. Since it took many years of real abuse to break the the wire reticle I had in my old, 25 yr. old 4X, I don't think that is much of a difference either. In spite of lots of nasty falls and knocks, neither of my 6X42's has any problem with shifting zero or breaking reticles. Frankly, I'm surprised at this. They should have based on what I've experienced or seen with other scopes.
In theory, the 6X should hold zero better and not break down as readily from recoil. Again, I'm not sure there is a practical difference. E

Thanks, this would be one of the last M8s. I'm a little leery just because I'd be putting it on a Kimber and it just seems sort of big for the rifle.

Big is relative. If it's the scope you want to run, then it will look just right when you're actually using it.

I have a M8 4x33, and having hunted with it, I can't see any difference between it and my VXII. No problems with the friction adjustments or lenses. I enjoy looking through it, and may pick up an FXII-4 x in the near future...

I have both and like both.... if the M8 can be had with Mc4 and less than or equal to $250, I think its a solid deal IMHO. Too much more than that & I believe I would just buy a new FX-III.