Just after your thoughts ... as background i wanna play battlefield 2142 at a decent FPS on high settings, as well as handle most new games at medium setiings (as a min) .... this is my current gaming rig:
Albatron NForce II socket A M/B
AMD Athlon 2500+ (OC to 3200+)
1GB Hypertec DDR RAM (2x512 in dual mode)
EVGA Nvidia 6800GT AGP video card
New Silverstone Case and a Thermaltake 750W toughpower PSU
I was thinking of upgrading the video card to an x1950PRO AGP for about $275 australian ... if i do that i'll keep the system till the end of the year, otherwise i'll buy meself a brand new DX10 compatible rig (minus case, PSU & Hdd's) in a couple of months (end of July) and probably spend abou $1500-$2000 AUS.
the reason being prices are ridiculously low on ram and cpu's right now... and I think this is the huge initial dip... once intel comes out with it's second price drop, it'll start evening out (the price that is)... for some reason ram is at an all time low too... so i'd wait til the 2nd price drop and build a new computer
I'd suggest getting a new pc when you can. Although, if you upgrade now, there will be plenty of new stuff by the end of the year. However, there's always new stuff coming out so any computer you build will be outdated in a few months (thought still quite good for a few years at least).
I'd go ahead and build, if my option was to drop that much on the dead-end AGP upgrade to make it till the end of the year. If you could tough it out until 3rd quarter with the old video, I'd do that - we shoud hopefully have some info on AMD's new line (K10) and Intel will have another round of price cuts. So you'll be able to save some $ and make an informed choice between brand A and brand I. Plus by then I'm (fairly) sure ATI will finally have their new graphics cards out, and nVidia could have a refresh of the GF8800 line out as well.