Video Card or more RAM?

What's your uses for your rig? Do you game if so whats kind of games do you play? Knowing a bit more would help!

If it's nothing too intense, go for some DDR2-800 RAM first. The 1066 won't give you any noticeable increase in performance and will be more expensive for an older generation product. You may even be able to get a dedicated GPU with the saved money.

Ah, sorry, I mainly play games.

At the moment I play:

League of Legends (30-45FPS on min graphics)
Minimum System Requirements
750 MB hard disk space
2 GHz processor
Windows XP or higher
1 GB RAM
Any DirectX 9.0 capable video card

Allods Online (Dark Red performance Unknown FPS Very Choppy)
Minimum Requirements:
OS: Windows XP / Vista
CPU: 1.5 GHz Pentium 4 or better.
RAM: 512 MB
HDD: 3 GB Free
Graphics Card: ATI Radeon 9600+ VGA Card

Counter Strike Source (45-80FPS Depending on map, Average settings)
System requirements
1.7 GHz processor (3.0 Ghz recommended)
512MB RAM (1GB recommended)
DirectX 8.1 video card (DirectX 9 recommended)
Internet connection

I'm surprised you can run these just on the integrated GPU. Since you only need a DX9 capable GPU, you could probably opt for a less expensive GPU and still afford the RAM.

Yeah I guess. What would you recommend for a less expensive GPU?

I know the 4890 was a popular GPU, but I'm not familiar with the performance of AMDs video cards.

A 9800GT would probably work well given that your games aren't extremely intense. That or something along those lines from NVidia would work well for what you play now, but probably not for much more recent games.

What's your PSU?

Get 2 more G of RAM same voltage, speed and latency. Preferably same brand.
Get a HD 5670 for the best bang for the buck:
http://www.newegg.com/Product/Product.aspx?Item=N82E168...
Or a HD 5750
http://www.newegg.com/Product/Product.aspx?Item=N82E168...
http://www.newegg.com/Product/Product.aspx?Item=N82E168...

LE:For your games the 5670 is perfectly fine.

My PSU is a 450W Rosewill Stallion