Your [current] monitor resolution is pretty low, but given that 1) there's another $140 in your budget, 2) you want this to last a few years, and 3) you may at some point upgrade your monitor, I would suggest nothing less than a HD5750. The PSU you've chosen is a good one, and could handle that.
just want to suggest reading all of Tom's do it yourself builds. Thats what I did and its all working well. I pretty much followed the $1500.00 March 2010 build minus 1 video card. I figured its a good safe "recipe" to follow. They also have lower budget builds compared.