It might also be worth considering 4 gigs of memory instead of 2 since it's so cheap. Also, since the 9800gt is around $100, it's also worth looking at an ATi 4850. On newegg, XFX has a 4850 listed at $109. It's considerably faster than a 9800gt.
I would really suggest saving up a little more and getting a Phenom II x2 550 CPU (100$) /w matching mobo and memory. It'll be a tad more expensive, but will play much better and last longer.
+1 on the 4850 instead of the 9800gt
+1 on 4gb memory