My first. What do you think?

Looks good. If your budget can fit it throw in a SSD as well. Only improvement i can see that i'd want.

I dont really understand how they work. lol. are they worth it?

SSDs make loads time a lot faster. It has become a custom to use an SSD for your OS and main applications while having a traditional HDD for storage and other apps. I would go with a 7850 for the GPU if you can stretch it. You said casual gaming but the FPS increase of the 7850 over the 7770 is well worth it.

PCPartPicker part list / Price breakdown by merchant / Benchmarks

CPU: Intel Core i5-3570 3.4GHz Quad-Core Processor ($214.99 @ Newegg)
Motherboard: ASRock H77 Pro4/MVP ATX LGA1155 Motherboard ($87.55 @ Newegg)
Memory: Crucial 8GB (2 x 4GB) DDR3-1600 Memory ($41.99 @ Newegg)
Storage: Intel 330 Series 120GB 2.5" Solid State Disk ($124.99 @ Newegg)
Storage: Western Digital Caviar Blue 1TB 3.5" 7200RPM Internal Hard Drive ($84.99 @ Newegg)
Video Card: XFX Radeon HD 7850 1GB Video Card ($169.99 @ Newegg)
Case: Corsair 200R ATX Mid Tower Case ($49.98 @ Newegg)
Power Supply: PC Power & Cooling Silencer MK III 500W 80 PLUS Bronze Certified ATX12V Power Supply ($69.99 @ Newegg)
Optical Drive: Samsung SH-224BB DVD/CD Writer ($15.99 @ Newegg)
Total: $860.46
(Prices include shipping, taxes, and discounts when available.)
(Generated by PCPartPicker 2013-01-22 12:08 EST-0500)

Yes. In my opinion they are. Overall snappiness of the system will improve. As the above posted most people load the OS and Apps they use frequently. Basically what a SSD does is it gets rid of the HDD bottleneck of waiting for things to load. It's worth it if you can fit it into your budget  .

I think I will do that, thanks.

Just search SSD vs HDD on Youtube. There are a bunch of videos there that show the difference head to head. It definitely makes a difference to have your programs on the SSD (not so much for storage).