Something like a Radeon HD 5550 would fit your budget and power supply. It is not a great gaming card, but it is a large improvement over your current card, and it is compatible with DirectX 11 games. If you can wait just a couple of months or so, the newer 7000 series cards will be here which will drop the prices of the older cards even further.
One other thing I thought of was some of the web sites that offer free games and demos. One site I use is HTTP://www.steampowered.com.
Another is HTTP://games.yahoo.com.
Many of the games are silly games for little kids, but many are extremely fun and addicting. Ever played Peggle, Chuzzle, or Angry Birds? If not you should try them.
I have also seen numerous free racing games if that is what you like.