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[Haraldx]

So the idea is to upgrade my old PC, from something that would be equal to the first thing that got ever released on Xbox 360, to something more that I can actually call a PC I use for gaming. The idea is still going budget, so no Nvidia GeForce series one billion and a half, please.

System..................Current setup..................................Preferable setup
Graphics card..........Nvidia Geforce 8400 GS 512MB.......Nvidia Geforce 9600 GS 512MB (Around 70$)
RAM.......................3GB..............................................3GB is just fine, I'm not running servers on my machine
Processor................Intel Pentium 4 3.00GHz.................Something dual core clocked at ~ 2.5GHz (around 60$???)

My graphics card is pretty damn outdated, the same applies to my processor. With the graphics cards I'm pretty sure where I want to go - Nvidia Geforce, around 70$-80$ (budget stuff, as I said). The 9600 is a great improvement (frames per second wise) over my current 8400. The price isn't that bad, and I even heard I might be able to use my old video card to some extent.
The real problems start when I'm thinking about changing my processor. I know nearly nothing about processors, so I don't want to get ripped off. The idea is going for a dual core processor clocked at around 2.5GHz. A single core processor just doesn't cut it nowadays. Feel free to leave suggestions regarding the CPU - I have no idea where I'm going myself.

[Jenova]

You can get some good Nvidia GeForce GTX xxx for ~70$. I bought a GTX 550 TI SC for only 100€, and it's worth like 300€ at least.
And as a CPU I'd suggest you an AMD Phenom II. I got 4x3.1 for 68€, so a pretty awesome deal as well.
One more thing, you should really watch out for compatibility with your mainboard. Also with the socket of your CPU, since I am too tired to search one for you right now.

[Gob]

From what I read ASRock and Gigabyte motherboards are the best out there, so look for those. I had an ASRock for 5 years and had no problems with it, and the BIOS is user friendly and sophisticated at the same time.

graphics:

MSI GeForce GTX 550 TI 1GB GDDR5 192-bit N550GTX-TI-M2D1GD5/OC - 139.23 EUR

processor:

AMD Phenom II X4 965 125W Black Edition HDZ965FBGMBOX - 112.43 EUR

motherboard:

MSI 760GM-P21 (FX) - 39.66 EUR

Hard Disk:

Seagate Barracuda 1TB SATA3 7200rpm (ST31000524AS) - 88.60 EUR

a total of:379.92 EURO . So cough it out madafaka . I did you favor to calculate price with TVA :>

I got it from www.price.ro

[Slaver Snipe]

Honestly if I had to rebuild my machine again on a budget I would probably look at

AMD Phenom II X4 965 black as Gob stated or the
AMD FX-4100 or the 4170 Zambezi, very high overclocking potential, was flamed quite a bit when it originally came out but updates have made it pretty good (4170 is about 15-20$ more than the X4)  There is also no real reason to go for a dual core processor as quad cores are inexpensive.

If you want to game at higher resolutions I would advise a 2GB graphics card, if not you can go with a 1GB card I would suggest price/performance either the GTX 550 class or a radeon hd 6900 class

Motherboard, I haven't actually looked at motherboards recently just make sure it's an AM3+ if your going with an AMD processor

You may also want to consider upgrading your ram because although you might have 3gb, if your pentium D is anything to go off of your ram will be slow as fuck in this day and age. G-Skill is my personal brand preference for ram.

[Gob]

I like to build PC's that last, without having to constantly upgrade it every year. And in terms of ram I suggest Kingston. I know many people including myself who have that brand and its reliable. Also having your programs and Windows installed on a different hard disk will increase performance of your computer. I have a 1 TB HDD for games,movies,music  and 450 HDD for programs and Windows. Of course you do not need a 450 hdd a 160 hdd or less will do. And if you are running Windows 7 its good to have 4gb of ram or more.

[Redivivus]

even 60 GB SSD is >>> than 450 GB HDD for operating system.

[Gob]

even 60 GB SSD is >>> than 450 GB HDD for operating system.

yeah well that was my old HDD then I got another one.