You can get a 500gb Hitachi for $100.
No, the PSU isn't fine. Get a reputable brand: Corsiar, Antec, Silverstone, Seasonic, XFX, OCZ or NZXT. Chances are that you'll be fine with this one, but low-quality PSUs do fail, and you don't want to be the one that gets his machine fried.
What's your overall budget?
I've got 190gb on a 10-month-old build, and I've deleted the games I don't play. If you've got a lot of music or pictures, that'll fill up.
GPU's certainly the weakest link, but we can't balance this thing out without a budget.
Hate to say it, but I think you should wait until you have a bit more cash. You need a better PSU for sure, otherwise you put your whole build at risk. And you need a better GPU for gaming, otherwise your system won't do what you want it to do.
are you re-using the 8800gt from an old build? if yes then tyhats fine i suppose until you can afford a better card. if your buying it, its a poor choice. Ditch the coolmax PSU also and get a reliable brand that will produce its labelled wattage.