Actually, whilst it would be quite overpowered for your machine, the recent price drops of the 7xxx series, resulting in a sapphire 7850 for an incredible 240 bucks!!!http://www.newegg.com/Product/Product.aspx?Item=N82E16814102986
Yes, it will be bottle necked by your dual core, but you want a graphics card to outlast your CPU, and not have to upgrade them all at once!
not to mention, in order to get a wee bit more bang for buck, you could OC, the e8400 willl hit 4Ghz, or sink a cheap core 2 quad second hand for a quick and diry upgrade path. Just don't skint on the gfx, and get a 550ti..