I've got the exact same computer.
I'm upgrading to an HD4850 or 9800gtx+, getting 2gb RAM and an AMD 6000+. You have 1 PCI-e slot, a 320w power supply, your ram is 800DDR2, and you have an AM2+ processor slot thing. You need to upgrade your power supply like I did. Also your case is tiny as forget, so get a new one or you'll have to keep the case open. I don't recommend the 9800gtx or any dual slot card because you have 30mm of space between the PCI-e slot and the cover of the CPU, and that card is 32mm thick.
9500gt is what I would consider low end. I've got an 8600gts at the moment, I can play any game on at least medium settings at my native resolution. 9600+ is what you should get (but since you can spend $200, get the HD4850, its single slot and has THE best price to power ratio on the market)