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How far should I go with upgrades?

Last response: in Graphics & Displays
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I was hoping to upgrade my desktop to where I'd be able to watch 1080p videos and have the option of using Skype in high definition.

I have an eMachines T5048 which is about 5 years old. I'm not really sure how far I should go in upgrading it. I know that I need a better video card, but I'm unsure of how new of one to get. I'm still somewhat intimidated by the idea of replacing the motherboard, so I wouldn't want to get a high end card that wouldn't be fully utilized.

I plan on upgrading the 3.06GHz single core Pentium 4, perhaps to a Pentium D 950. If I purchased the CPU alone, could my current fan/heat sink handle the change? Also, I realize that the 300w PSU isn't going to cut it.

Other specs:

60 Hz LED monitor (1920x1080)
15 Mbps internet speed
1536 Mb RAM
Intel D101GGC motherboard
PCI-E 1.0 x16
DirectX 9.0

Am I on the right track thus far? Any suggestions would be greatly appreciated.

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Graphics card Master

You should be fine with the existing powersupply, the type of card you need uses less energy than a bumblebee in flight!
I'd hold off on the CPU upgrade, I'm not even sure the system BIOS will allow it anyway and I'd strongly advise you to stay away from BIOS updates: Get it wrong and recovery can be difficult and expensive, and in some cases just not possible.
Your system uses an old version of PCI-E, it's not going to be compatable with all the newer cards out there, but this should suit you perfectly:

http://www.newegg.com/Product/Product.aspx?Item=N82E168...

Thanks for the replies.

The prices of these two cards seem pretty reasonable. I was wondering about the CPU though. I read that single cores won't perform well with 1080p unless they're over 3.5GHz. Is that inaccurate?
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Graphics card Master

That is about playing videos without hardware acceleration. With hardware acceleration (having a graphics card), the load is transferred from the processor to the graphics card.
Graphics card Master

Oops, should have said,to stay away from PCI-E 2.1 cards, they're known to have issues with some PCI-E 1.0/1.1 slots.
Luckily the card linked to by Sunius is PCI-E 2.0 ;)  and it'll run hi-def with ease.
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