I can't even come close to this price if I look for parts on any websites, so something must be wrong here. Keep in mind this is in Canadian dollars. The only thing wrong with this system that I see is I'd rather have a GTX 295 for games at 1920x1200, and that would require a better power supply.
Basically agree with mi1ez. To do any upgrades, you'd first have to swap out the PS. Most likely there would not be an overclocking option. Best that I know, Gateway uses the cheapest hardware it can find at a given moment. With all that said, it seems a fair value for the money paid.
Don't know if the option is available to you, since you're in Canada, but you might consider checking out Cyberpower and what their price would be. An advantage with Cyberpower is that you can order specific parts and you can overclock them with relative ease, depending on the motherboard you order.