I'd say a Radeon 4850 is probably the best I'd put in there, anything more is going to be too limited by the CPU. It'll be a huge improvement over your current card for less than $170.
------------------------------Core2 Duo E6850 @ 3.6 GHz -- Gigabyte GA-P35-DS3R -- HIS HD 4870 @ 790/1100 -- 2 GB Corsair XMS2 6400 4-4-4-12 -- Silverstone Zeus 750W -- 900 GB HDDs -- Arctic Cooling Freezer 7 Pro -- Acer AL2216W 22" @ 1680x1050
and you will see that the highest you can go is a Pentium D 960. If you can find it cheap go for it. Depending on what games and resolutions you're gonna play you probably won't get a benefit out of anything faster than a Radeon 3870/4670, or an nVidia 9600GSO with your current CPU. With the dual core 960 you probably won't notice any improvement with GPUs beyond a Radeon 4850, but an 8800GT may prove a good fit.
Considering I don't see Pentium D960s for sale anymore you may have to scoure eBay for one. I don't think it's worth the Hassle, or the money, so in your case I'd just put in a Radeon 4670.
------------------------------Playing X-Men Origins: Wolverine Athlon 64 X2 5000+ @3.24 Brisbane | GIGABYTE GA-MA790X-DS4 | 4GB Mushkin DDR2 1066 | Plextor 760A| 2x 3850 512M CF| WD 1TB Black| Fortron Blue Storm II 500W | APEVIA X-Dreamer Black | Win XP Pro & Vista Buisness 32bit
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