My wife uses a 9800gtx+. We got it at best buy nearly 2 years ago for $120. They are surely cheaper now (not sure if BB still stocks 'em but you can find one on e-bay no problem). She plays nearly max settings on 1920x1080 and gets 40+fps standard. Having said that, a 460 or 560 will be more of an improvement in the gfx department...but as others have alluded, the processor may be your next bottleneck. Hate to be one sided w/ Nvidia solutions, but other than my lappy's mobile 5870, i havent had any experience with their last few generations. Hope this helps you though!
AMD 5770's are nice about $100 or the killer 5870 (they are closing these out for about $200) Others recommend the 460 (get the 1Gb model, about $150) and 560 (about $250) both solid choices.
Spend what you CAN on a video card, then you can use it longer before it's too slow to run your games... Your power supply will support any of these single cards.
You can try one without ANY CPU upgrade, if your happy leave it at that. If your not, you can try JUST the CPU swap you could use the same new CPU in your next build. OR, wait till you have enough for a CPU/RAM/and motherboard replacement because your current motherboard can NOT support 125watt CPUs no matter what version you have.....