If I'm building a new system from scratch, I'm looking for something between $1000 to $1500.
I should note that I'm not a big stickler for high-end graphics. The thing that irked me about Human Revolution and that made it almost unplayable was the stuttering and framerate dips.
Therefore, as long as a suggested upgrade can run new games for the next two years at *lowest* settings maintaining stable FPS, I'd be happy with that.
Well if you don't care too much about graphics quality, then I'd think a HD 5670 or 6770 (Both can be found for under $150) would work just fine.
Just make sure that your PSU can handle the increase.
But IMO, your setup is all pretty dated. If you have the funds I think you should go ahead and build a new system.
You can make a pretty BA gaming PC for the budget you set.