Looks like you need a lot of upgrades. :(
Well, I guess it depends on how intensive the games you are planning to play.
Keep in mind when you upgrade your video card you may need to upgrade your Power Supply as well. You can find out how many watts it is generally by opening your powersupply and looking at the wording on it.
And, upgrading just your Video Card won't always solve all your problems. You can upgrade to an awesome Video Card, but if your processor isn't up to the task it'll be like trying to squeeze the strength of a waterfall (video card) through a faucet (processor). It gets bottlenecked and you don't get the Video Card's full worth.
Of course, sometimes you just got to take it one-step at a time (we're not all made of money) and make improvements as we go.
I'm not sure how "savy" you are with putting stuff into your PC, but here's some upgrade tips.
On newegg.com you can find some good combo deals...
For example.....motherboard/processor combo. I paid $200 for one of these combos (sorry I don't recall the specifics as it's been like 6 months), but I know it was a 3.0 ghz processor.
Video Card....Radeon HD 5850 I think it was...used....on ebay for $80. There's stronger ones out there, but of course cost $300-$500. This one was more than enough to play any game out there righ tnow.
RAM...you need more. Go for at least 4-8 RAM.
Windows 7....Bestbuy....$200...pfffft! Ebay...OEM...$80. (OEM are basically the bulks cd's that they send to DELL and other companies so they can install them on the PC's they build/sell). If you get this on ebay all you get is the CD & the registration key, but it's still Windodws 7. It'd be like taking the cd & key out of the Best Buy Windows 7 box. It's just minus the box, manual whatever. But you don't need anything else...it installs itself.
PowerSupply....depends on the stuff you buy. I'd recommend at least a 800watt. This will probably run you around $100.
Your case is also a possible concern. You'd need to make sure it can hold your motherboard. If your case isn't made to fit the motherboard you ordered than you can't put the motherboard in it. It's not hard to figure out. Just look up the case online and look for it to say something like....ATX, Micro ATX compatiable and stuff like that. That's basically the template for the motherboard. Than you just need to make sure you motherboard is the same template as what the case lists it can hold.
Another thing to be aware of with your case is that it can fit the new video card in there. Sometimes you get a good video card and it's too big to fit in the case.
Hope this helps.