Carnax: Here's what you should do.
1. CPU - You want a platform for gaming, right? No games utilize more than 3 cores, so the AMD Phenom II X3 720 2.8GHz is perfect for what you're looking at. It's currently around $120 as opposed to $220. This will save some dough for a better videocard.
2. Motherboard - With the AMD Phenom II X3 720, buy the ASRock M3A780GXH/128M for $90. You can easily overclock your CPU to 3.4GHz with a stock heatsink and fan. Just remember to buy Arctic Silver 5 for $5. If you ever decide to overclock more than that, just buy an after market heatsink and fan for $20, and that could get you to 3.7GHz.
3. Video Card - Your video card decision will determine the type of Power Supply you need. If you're looking to game in 1920 x 1200 resolution (if you have a monitor that supports it), then at the least, buy a GTS 250 for $120. MSI or EVGA are my recommendations. If you are looking to save the $100 on the CPU, you can put it towards your Video Card and buy a GTX 275 for $220. You can also double your performance in a GTX 275 by simply overclocking it.
4. PSU - If you're going with the GTS 250, you'll need at least a 500 Watt PSU. However, if you're going with the GTX 275, you'll need at least a 550 Watt PSU. Just be sure that you get a PSU with a +12 Volt current rating of 40 amps. For you, I'd recommend the OCZ Fatal1ty OCZ550FTY 550W ATX12V / EPS12V SLI Ready CrossFire Ready Modular Active PFC Power Supply for $80. If you ever decide to, it will have enough power for two GTX 275's in SLI/Crossfire.
5. I'm assuming you already have a 7200 RPM hard drive. That's actually fine for gaming. You won't notice anything except slower load times with your hard drive. But, if you want fast, buy a SSD. The Corsair P128 (CMFSSD-128GBG2D) 2.5" 128GB SATA II MLC Internal Solid state disk (SSD) or Crucial CT128M225 2.5" 128GB SATA II MLC Internal Solid state disk (SSD) are both very good SSD's for $330. You'll want an case since they're 2.5", so get an ICY DOCK MB882SP-1S-1B 2.5" to 3.5" SSD & SATA Hard Drive Converter for $25.
6. Memory - More than 4GB's RAM is not needed for extreme gaming. I recommend Crucial 4GB (2 x 2GB) 240-Pin DDR3 SDRAM DDR3 1333 (PC3 10600) Dual Channel Kit Desktop Memory Model CT2KIT25664BA1339 for $74. You can overclock to DDR 1600 and pretty decent timings.
7. Tower - The cheapest but best tower I'd recommend for your system is a mid-tower, the COOLER MASTER Centurion 5 CAC-T05-UB for $45. Really, you don't need to spend more than that. Save the extra money from this and invest in something that will enhance your gaming experience, like a new monitor.
First, invest your time in learning to overclock. It's really simple, and you easily save a couple hundred dollars by not buying more expensive CPU's, GPU's and memory and using them at stock speeds.
The amount you'll spend for a great gaming rig is just $629 if you do everything right.
