Yup, ditch the psu. Get a Tier1/2/3 one with around 500w:http://www.tomswiki.com/page/Tiered+PSU+Listings?t=anon
The only other things I would swap out are the video card & cpu cooler.
8800GT is cheaper & faster. If you can wait a bit, the new 8800GTS 512MB should be out next week. It's delayed. Supposed to be out this week. It'll be somewhat faster than 8800GT. But the new reviews show the 8800GT takes the crown in terms of price/performance.
If you overclock, the Zalman will be loud at full blast. If you don't, it's whisper quiet. If you o/c, get a quieter cpu cooler like U120E, Geminii, Typhoon, Infinity, Ninja, Tuniq, etc.