^ +1 for a $300 upgrade - which would extend the life of your pc +1 year at least as previously stated
However if you play WoW mostly I think you would be served well with only spending around $65 - 90 on a GPU, which will still be a huge jump from your current video card. Here are some suggestions:
$65 after mail in rebate - mid range card with lots of memory (not as important as it may seem though)
POWERCOLOR AX4670 1GBK3-P Radeon HD 4670 1GB
http://www.newegg.com/Product/Product.aspx?Item=N82E16814131128
$72 after mail in rebate - very fast R770 architecture in mid to high end range with roughly double the processing power of the 4670 (640 stream processors vs. 320 in the 4670)
MSI R4830-T2D512 Radeon HD 4830 512MB 256-bit GDDR3
http://www.newegg.com/Product/Product.aspx?Item=N82E16814127420
$77 after mail in rebate - best Nvidia competition at this price range - the 9600GT - not as fast as the 4830 though:
PNY VCG96512GXEB GeForce 9600 GT 512MB 256-bit GDDR3
http://www.newegg.com/Product/Product.aspx?Item=N82E16814133239
These GPUs will have no problem with WoW at all.
You definitely should upgrade to a total of 4GB of ram. You should check inside you pc and see if you have two extra available ram slots, then you can add 2x 1GB sticks. If not you will have to replace the 2 current 1GB sticks with 2x2GB sticks. I not sure which one you will have to do because I couldn't find any info on you're mobo.
As for the PSU it is a good upgrade as long as you intend on building you're next pc from the bottom up because it should last 5 or more years. Also if you do plan on building you're next pc you should consider what kind of parts that might have (i.e. how powerful do you want that machine to be).
Finally if you chose a cheaper GPU you will have a hundred bucks and some to spend on a better internet connection or you're next pc build down the line