The game situation on linux isn't going to change in the near future. The platform needs enough users willing to pay for games in order for it to get more titles(shame what happend to Loki).
I'd suggest starting with a dual boot configuration to ease into things. I strongly recommend Suse for newbies. If you can spring for 40 bucks, you can get their 9.0 personal edition with 60 days of no extra charge installation support, which is often the major hurdle when you're getting started. Most of the distros you read people recommending here are all good in their own right, but I feel Suse is a particularly good distro for people trying to kick the windows habit(although I use it myself, a Linux user of some 9 years.) The price for 2 months of support is just over what I charge non-business customers for an hour of my time. If you don't want to pay, they just released 9.0 through their ftp servers(no support though), 2 days ago. Check:
<A HREF="http://www.suse.com" target="_new">http://www.suse.com</A>
Most RECENT distros will install dual boot with few to no problems with an existing WindowsXP install. Your system spec is good enough to run any distro I'm aware of with all the bells and whistles. Also available from Suse, is a slick and cost effective package called Suse Linux Wine Rack. It's available to paying customers of one of their retail versions, for 40 bucks. It allows you to run a wide range of Windows apps, incluiding most of office and the like. It also allows you to run many Windows games. never used it though.
But for 80 bucks, you can get a clean modern Linux distro, with the ability to run many windows apps and some games, while keeping your WindowsXP intact to fall back on. Here's a link to their press release about WineX:
<A HREF="http://www.suse.com/us/company/press/press_releases/archive03/winerack.html" target="_new">http://www.suse.com/us/company/press/press_releases/archive03/winerack.html</A>
I actually have a copy on order, should get here next week.
The move to Linux is not an easy one(what, in life, worth doing is easy?) Be prepared to learn a new way of thinking about your computer.
Let me stress that although I'm a Suse fan, I'm not a fanboy. You can have really good experiences with other distro's, I just personally feel that Suse is the best for someone whose moving from Windows. My 2 cents...
<i>SCO is to Linux what a flea is to a dog.</i>