When you take into account the RAM draw of Windows, some new games such as F.E.A.R. actually require slightly more than 1gb RAM -- at least at 1200x1600+ -- so if you can, get 2gb. And if you're going DDR400, be aware that some mobos have trouble seeing 4x512mb sticks at 400mhz (2x200mhz). You might have to massage your memory timings to get that to work (though it shouldn't be too difficult).
Currently, I'm running a 3500+ w/2gb RAM (2x1gb) and an eVGA 7800GTX 256mb at 1200x1920 rez. My only slowdown issues occur with newer games such as F.E.A.R. and Oblivion, but only when I enable FSAA or any SM3-heavy effect. I plan on upgrading to the X1900 in a couple of weeks, which should solve that problem.
As a reference point, at 1050x1680 w/ HDR or 1200x1920 w/o HDR, FRAPS reports my framerate in Oblivion at 30-60 indoors/towns and 20-30 outdoors -- except in combat it might drop to 15-20 outdoors. In very heavy grass, however, it drops to single-digit framerates. Yet the game is always playable, even below 20fps (though you wouldn't want to play it at those low framerates). I'm guessing that most of my issues arise from the small frame buffer and non-SM3-friendly GPU, because it was totally unplayable at 1200x1920 w/ HDR (my mouse input lagged severely). It seems that my CPU can handle just about anything I can throw at it, as long as my GPU can stand the strain: the framerate test in F.E.A.R., for example, won't change significantly when I alter the physics settings (1-2fps).
And if you can, throw a sound card into the mix, either the Audigy2 ZS or the X-Fi, whichever you can get cheapest (I upgraded from the Audigy 2 Value to the X-Fi, and it's a world of difference in both quality and performance). Your CPU will thank you for it.