I added ram to a similar sys recently and it helped somewhat and the ram was cheap used.
But if you want performance for grafx such as todays games - that sys is totally inadequate.
Look at AMD socket AM3 CPU'S - read up on Phenom II or Athlon II
they use DDR3
and they are great performance for a low price.
ATI is the hot grafx card esp. the new 5000-series that support DirectX 11.
It simply depends how much performance you want; or how much you want to spend. But you get a serious sys with AMD's platform approach for a low $ figure - AMD products are highly overclockable also.
You are their target market.
If you want high performance sys
look at Phenom II 965 Black Edition stepping C (also the PII 955, slightly cheaper)
Look at mobo by MSI model GD-70 - very hi perf mobo.
High end ram by OCZ 1600 (AMD edition) 4 gigs(2x2) or 8 gigs(2x4).
You want a good power supply also - min 600w depends how many grafx cards you want to run.
this assumes you want to game.
Phenom II and Athlon II are both available as dualcore, triplecore, or quadcore cpu's.
Socket AM3 is current and will remain the main socket through 2010 at least - new cpu's will be drop in upgrades.
You need to decide your budget mainly. Some old parts maybe useable.