Budget (600-800)Gaming Computer for University

Hey guys first off I would like to ask will I be ok through university with a :
P4 3.0ghz w/ HT
1 or 2 gigs of ram
Nvidia 7600GS AGP

and a Dell d610 laptop.

If i can only afford to replace one which should it be?
I plan on doing some gaming but phasing out as I finish university. Would like to do some freelance graphic work as well.

APPROXIMATE PURCHASE DATE: (In the next few months) BUDGET RANGE: (600-800 Canadian) After Rebates* Or 500-700 USD*

SYSTEM USAGE FROM MOST TO LEAST IMPORTANT: (School work, Photoshop, casual gaming, web surfing, movie watching, ect)

PARTS NOT REQUIRED: (e.g.: keyboard, mouse, monitor, speakers, OS, harddrive(S), Dvd burner, Sound card Case(If I Can I get away w/ using an old one that I got free off craiglist?)

PREFERRED WEBSITE(S) FOR PARTS: (ncix.com Canadian prices please) COUNTRY OF ORIGIN: (Canada) I'm fine if you guys use NEwegg.com links but please take 20-30% from the total budget.

PARTS PREFERENCES: Doesn't matter. Always have used Intel/Nvidia, would prefer to stay away from ASUS after having warranty issues with them recently.
OVERCLOCKING: Maybe in a few years, SLI OR CROSSFIRE: Maybe in a few years.

MONITOR RESOLUTION: (1024x768 for everything other than games, 1600x1200 for games)

ADDITIONAL COMMENTS: (Would prefer a low power one, minimal lights and noise please do not use bundles as I will be buying locally from a family friend and will get a decent discount.)

Thanks in advance!