In that price range you should be looking at an HD6950 or GTX 560 Ti.
Have you tried overclocking that CPU? 2.67ghz is pretty low these days for gaming and will limit frame rates in the more cpu intensive current games, especially the ones that only utilize 2 cores(sadly there are still a lot of them.) With a good air cooling though core 2 quads can usually get up around 3.5ghz or higher which would be fine.
Adding 2 more gigs of ram is also a very good idea and pretty cheap these days.
Whats your ideas on the 5770 4890 and I'm digging the GTX 560 Ti all the way...I never tried overclocking my cpu, i don't even know how to. I've read on the How To but i never managed to try. lol and to get to a 4gb i got to switch to 64 bit. I actually have 4gb ram but system doesn't see it since I have Xp 32-bit.