My HP branded desktop PC is currently equipped with a GeForce GT 220. It's proving to be inadequate for running some games, so i want to upgrade it (and the power supply).
After some online research I am thinking of installing a GeForce GTX 260 Super Overclock, however I'm not sure whether the GTX 260 will improve things much considering the motherboard doesn't support PCI-E 2.0. Also, the PSU I have in mind is the Thermaltake EVO_BLUE 650W (48amps +12V).
The Links below give the specs of my PC and of the GTX 260 Super Overclock.
I'm surprised that a modern chipset like that wouldn't support PCI-e 2, anyway My PC also doesn't support PCI-e 2 and forum members recommend I go no higher than a Radeon 5850 if I'm going to upgrade because of this, however the 5850 is a lot more powerdul than the 260 (even if OC'd) so you should be fine.
Your HP has a good gaming processor in it. The i5-750 is great. And 4GB of RAM is right where you want to be as well. The case itself isn't the greatest for air intake, but you can probably get by.
The GTX 260 would be a MASSIVE upgrade over the GT 220. However, the 350W power supply in your computer could be an issue depending it's actual specs. So upgrading that PSU like you're considering is a good idea.
HOWEVER: $199 for a GTX 260 is pretty high. You can buy a GTX 460 1GB (newer/faster card) for $150 or so if you can buy from USA based websites like NewEgg.com.