Upgrade ram for speed or buy new pc?

I have an ancient Dell XPS gen 2
P4 3.2Ghz 512 800FSB
1.5 gig ram (2x512k) , (2x256k)--has 4 DIMM slots, 4GB max)
250GB hardrive
Radeon X1300/1550
17" acer AL1714 monitor
460watt powersupply
running XP service pack 3
I use this mostly for home office, son plays Everquest quite a bit, but it lags significantly at times in 1024x768 , especially since we went to service pack 3 it seems.
I'm considering a pkg at dell including 24"monitor and Inspiron 560 for $669
dual-core E5400(2.7Ghz, 2mb L2800Mhz)
Win7 home
6gb dual channel DDR3
640GB SATA 7200rpm
-weak pts: vid is integrated Intel GMA X4500
-300w ps
-only 1x16PCle slot
So: would it be better to just fork over $70 and get 2x1Gb mem sticks to replace the 256k ones, or bite the bullet and buy the Dell pkg and add a $100 vid card?
Thanks for your help..money is an issue thanks to this economy, I appreciate your advice and input.
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More about upgrade speed
  1. The Dell option will wipe the floor with ur previous system. For $100 u could get a 5670 and u would be set.
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