Thanks a lot for your post. It has opened my eyes to some new possibilities. However, I do not want to go lower than a GTX 260. I also don't mind if it's ATI or NVIDIA. Either one is fine with me.
As for upgrading completely, I found this AMD Athlon X2 5000+ 2.2GHz Socket AM2+ 65W Dual-Core Processor and supposedly you can unlock two cores to make it a quad core! Seems too good to be true. I will do more research and see what the downside is (I know you have to have a mobo with ACC to unlock it).
Sometimes unlocking the cores works fine, other times it causes more problems than it's worth. Although If you get the setup I listed you could also go with a 5xxx series ATI card, which is better in price vs performance.
I would get a 6000+ and a GTS 250 for under 200.00$ like IH8U suggested, but buy both from Newegg so you don't have to pay shipping nor tax. Tiger kinda sucks for these kind of purchases.