The OP's original question concerned balance.
Yes, I believe your system is balanced. It is, however, as you may have realized, somewhat modest, and will not play a lot of games on high (or better) settings.
Tiny Voices is correct though; rather gatekeeper is wrong, about PSUs. A quality 450W PSU will run a HD7850 24/7 for years. A 380W Antec Earthwatts could do it. Your 500W ModXStream Pro is a decent unit, although it may have been built with questionable capacitors that will degrade more quickly than some others, especially on high loads and/or high temperatures. Assuming your case has decent airflow, running a HD7850 on it will not be a particularly high load for it.
For the best advice, we'll need to know the resolution of your monitor, the [types of] games you want to play, and your budget; I will offer the following general advice:
1. The first place to improve is the graphics card. The previously mentioned HD7850 (~$170) will allow you to play most games at 1920x1080 on "good" settings; mostly high, perhaps minus some eye candy. For around $120, a HD7770 would also be a good choice, with a mix of medium and high settings. For around $100, a HD7750 should be able to play with mostly medium settings.
2. After a graphics card upgrade, you will notice that some games (MMO in particular) will still be laggy (although they'll look a lot better). That's because your CPU will be severely taxed by such games. For $100, I believe a Phenom II 955BE will likely be a better choice for games than a $130 FX-4300. For $180, a FX-8320 would probably be a little stronger, but only you can know if it would be worth the additional $80. You'd probably also want a $30 cooler; I have and recommend the Xigmatek Gaia, which works as well and is quieter than similar offerings from Crappermaster.
3. If you have a 64bit OS, and particularly if your RAM is a single 4GB stick, getting a 2x4GB kit of DDR3-1600 might also offer a little improvement since it will be operating in dual-channel mode. This shouldn't cost any more than $40, possibly less.