I have been told to keep the PSI under 120 on most impacts because you can blow the seals out. Never seen it in writing but that's what I have been told.
CFM usually means more than PSI, my home compressor puts out around 6.5 cfm @ 90 psi. At work we have 3 industrial compressors, I'm guessing we have a constant 15+ cfm @ 90 psi at work. I swear my gun is way stronger at work... At home if you can use the gun while the motor is running, you can tell a difference.
Oil them every time you use them - 10 drops or so. Some models have a small allen bolt on the side of the housing, remove this allen bolt and oil the same. Some models have a small grease fitting in the front of the housing, this needs to be greased every so many hours of use (At home, once a year is normal, at a shop every 2 months or so) - refer to the owners manual.
Now, if it hasn't been properly oiled, yes it will lose it's power, eventually to the point where it won't turn at all.
You can try to oil it run it (under no load), oil it run it, X a few and see what happens, sometimes it helps.
Depending on what model it is, you can order rebuild kits for them.
You get what you pay for with impacts, I had a cheap Cambell Hausfield that didn't last long under use. For the $ the IR 231 is a good buy.