The HD 4670 1GB AGP is the most powerful video card you can upgrade to; $115.http://www.newegg.com/Product/Product.aspx?Item=N82E16814131161
However, your CPU will surely cap it's performance. Thus, in the end you will be wasting money.
I would have to guess that the best "new" card in your situation would be an HD 3650 for about $63 after rebate.http://www.newegg.com/Product/Product.aspx?Item=N82E16814121260
I think that would give you the best performance for the money.
Realistically speaking, if you want to play games released since 2007 you should really buy a new PC.