RAM is really cheap these days so it shouldn't be to hard to crank it up to 3GB if you have some cash on hands.
Video card is next. I'm not a big fan of ATI myself because between Nvidia and ATI I had most problems with ATI cards. But thats a matter of taste and needs I guess. For a standard system and a standard user the brand won't really matter. You'll be alright with a card from the HD range for a couple of years.
After that, if you have the cash, you could see if you can upgrade your processor but since it's an old computer and today's CPU's are all dual cores I doubt that's going to work. Replacing it would probably mean replacing your motherboard as well.
Let me put it this way: What is your budget? If we know how much you can spend we can tell you what you can do with today's prices.
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