Need help with cards

My nvidia 8800 GT burned out after like 8 months. I've been using 7300 GT currently. I just bought an 8800 GTS [the same card my wife has] and installed it only to get vertical lines during the boot process. Upon searching I discovered this meant the card was faulty , so I'm sending it back and ordering another 8800 GTS new from amazon.

What should I do about upgrading my computer now? All of a sudden I hear there's PCI 2.0 and every card I try to buy is 2.0 and not compatible with my mobo. The only cards I know of are the one's I've already used because I'm not in with the "technology crowd" anymore so I never hear the latest updates, etc.

Should I just save up for a whole new system? pci-e 2.0 mobo, new cpu, new ram, gtx 250 or what? I'm so confused. What's the best next logical step for me? Keep finances in mind. I can upgrade but I'm not going over $500 and it won't be anytime soon.

Current specs:

Windows 7
Nvidia GeForce 7300 GT
1GB GSkill PC-6400 DDR2 RAM x2
Intel Core2Duo CPU E8400
EVGA nforce 680i LT SLI motherboard
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  1. You may want to look at the guidelines (the link is in my signature). To really tell you what you should do, we need to know what you do with your computer.

    I can already tell you that you should be considering a new build. You've got a lot of old tech that is giong to be hard to upgrade very soon. Luckily, it won't take much to get you more up to date. A real cheap (gaming focused) build can be had for under/at $500 (the first build). It's not as easily upgraded as if you spent a little more, like around $650 (the second build).

    Obviously, if you're not a gamer, these builds can be changed very easily to be tailored to what you're doing.

    <$500:

    CPU: X3 440 $75
    Mobo/GPU: Gigabyte GA-770TA-UD3 and HD 5770 $220 after rebate
    RAM: Crucial 2x1 GB 1333 mhz CAS Latency 9 $58
    Case/HDD: Rosewill Blackbone and Seagate 7200.12 500 GB $70
    Optical/PSU: OCZ ModXStream Pro 500W and cheap SATA DVD burner $49 after rebate

    Total: $472

    $650:

    CPU: X3 440 $75
    Mobo/GPU: Gigabyte GA-790XTA-UD4 and HD 5770 $250 after rebates
    RAM: G.Skill Ripjaws 2x2 GB 1600 mhz CAS Latency 7 $110
    HDD: Seagate 7200.12 500 GB $55
    Case/PSU: Antec 300 Illusion and Earthwatts 650W $120
    Optical: Cheap SATA DVD burner $20

    Total: $630
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