What is your monitor's resolution? For not much more, you may find that a HD4770 provides notably better performance.
Good PSU choice.
Coolermaster cases have earned a rare spot on my personal "do not buy" list. I think every one I ever bought had minor quality issues. None couldn't be readily fixed, but I've never had a problem with any cheap Rosewill case I ever bought, so they're now my choice at the low end. That may drop another $10 or so from your price too.
I know you're trying to be cheap, but a 500GB Samsung Spinpoint F3 drive will probably be worth another $15 for the improved performance.
I agree that we need to know what your monitor resolution is to make a good GPU suggestion. A dual core CPU with a faster clock speed would probably be better for gaming since it would allow you to upgrade the GPU which is more important to a gaming PC. Here's another build that comes in slightly over budget, but has a much better GPU:
Hmmm, that high you may not find a HD4670 adequate.
You're in a tough spot as far as CPU vs. GPU weighting. I found that a 4850e bottlenecks a HD4670 on Guild Wars at 1440x900, and the X2 240 Regor is only one tier higher on the gaming CPU chart. A X3 425 for $72 is probably the lowest I'd go on the CPU. For the GPU, a HD4770 or HD5750 may work well enough, especially if you lower a few settings. You can use that 400W Corsair with either of those. About the only place I see to cut, and it isn't much, is the case. A cheap Rosewill can be had for about $30.