Buy a new Duo Core CPU for $40-70 with at least 2.6~2.8 Ghz if you're going casual. If you got the money, get a Quad Core for $100-200 (Preferably an i7 Intel Chip for all-around purposes). THIS MAY REQUIRE A NEW MOTHERBOARD! (A Gigabyte Mobo supporting these CPUs costs about 60-100 dollars)
Graphics cards, I suggest an Nvidia Geforce GT 260 or higher model (Non-recycled Geforce cards, unless casual, get the GT 250 for $100-120). If you prefer ATI, get a Radeon 5400+.
All this should cost within 150-350 dollars if you know where you're looking at and if you have some parts that support any of stuff listed.