The Question Sillycrown, How much more are you willing to spend?
If you want to spend more money such as $300 more. I would upgrade your video card, sell the old card (ie: here would be a good place :P). And get more RAM.
Now about the RAM, what speed is it? You say its 512... You could go with faster RAM rather that just more. For gaming, 512 is just fine. 1GB is rather overkill for games, but its just what you prefer. Myself, I have 1GB, but thats what I prefer.
About the vid card: Depends on what you really want, you could go with either Nvidia or Radeon. Radeon supports DirectX 9, but Nvidia cannot really do that. I purchased a Radeon 9600Pro 256MB DDR. I like it.
All in all, it just depends on what you would like to spend money on... What about your keyboard and mouse? Monitor? Maybe a 19inch would work? Just depends on what you currently have. The machine you listed is perfect for gaming right now, no major need to upgrade. But if you have the money burnning in your pocket, I say go for it.
Hope that helps!
-The_Shooter