Specter, RAM is pretty cheap these days, so getting atleast 4 Gigs of ram, preferabbly a pair of 2 Gig sticks.
for the Processor part, as Asad suggested ... go for either the E6750 (i'm using it and its a great CPU ...but its 65nm, so will suck in a 10-20 more watts on full threshold as compared to the E8400 which is based on 45nm technology...) or the E8400 (or if you could wait till E8300 is available here, it'd be the best bang for the buck)
for the motherboard (since i researched ALOT! app. 2months back when i was about to get my new Machine) ... DG33FB sounds the best option, looking at ur budget. if you play mediocre games .. like TombRaider: Legend, GTA: San Andreas, NFS etc ... the onboard graphics support is enough .... so you could invest the Graphics Card money on a shiny and sexy Casing + a mediocre (4.1-5.1) sound system+ a nice Keyboard Mouse .... (go with the black colour for all the stuff ...the Display, casing and mice ...just a personal preferance ..not pushing you in anyway though ... my Machine is in all black ...with silver touches here and there ..)
just go for a bigger HDD with 16MB cache atleast.... .. if any money is left over (which i highly doubt it will ) ... then go for branded PSU.