Yes, the ideal world would be DDR3 mobo (without the bells and whistles of XFire and SATA 6 to save money) and and X3. A bit more pain now, but it means upgrading the computer for Birthdays and Christmas into a great gaming machine will be easier.
Remember you do not have to go for 4gb of DDR3 - just one 2gb stick is enough to start with. Then, over time and at leisure he can get another stick, eventually a game killing CPU all one part at a time.
I know it is extra cash up front but it is well worth it - the problem with the short term solution of DDR2 mobo is it will end up being a patch up job that will end with him still needing a whole new system soon