More than likely it is DDR2 ram.
I'm running the same processor right now with a 4650 and do pretty good on games. But then again I don't run hardcore new stuff and I always have to turn off shadows.
Anyways. Any newer/faster vid card that you get should run fine. It may or may not be able to run at full throttle but you will get a performance boost regardless. Most people here will advocate a "balls to the wall" upgrade on everything. But for me, I only upgrade when I absolutely have to... which means when something breaks or the system just becomes so slow that it's unusable.
Also, along with a new vid card, get another 2 gigs of RAM if you can and you should be sitting pretty good for a while, along with Win7 64bit.