Pretty legacy system indeed but for now the card your chap suggests is OK and only about £60. It's getting harder to find AGP cards these days (but there is talk of this port returning) as most mboards are PCI-E. To keep things sweet, grab at least a a 750W+ power supply too, you'll still get one with the connections required to fit your mboard. It is also worth checking your games requirements too so as to avoid the few cards that won't play ball.
All you are going to have to watch is the
extra heat generated in there so make sure your cooling/airflow is really good and add at least another fan (unless you have the 120's), case top with either an Excalibur or roller type Aero 4 (excellent fans) - the idea being to pull cool air into the chassis from below and suck the hot air up not out the front over your Rom drives but out the top of the case. Done right it works a charm in keeping temps down.
Of course it depends on the games you play (I can still play Command and Conquer 3, Homeworld2, MoH, Total War on my 24" without any issues but the latest games do need/benefit from more processing/rendering punch). I play on a system not that far above your spec and with a lean system its fine, cost me 1400 in parts to build six years ago and it still does some serious rendering stuff now! With the "Min requirements" on applications closing in on the spec, I'm building some Quad Core, CrossfireX, Liquid Cooled loveliness to run on four 32" TFT's next year. This is less of a burden than it might appear, I can't wait.
Benny makes a perfectly good argument when it comes to 'keeping up' but no matter if you choose XBox or PC, the march of progress is unavoidable. I personally prefer to build a monster right out of the blocks and be good for many years with all that "swiss army knife" functionality that the PC offers. That and your current machine is still a darn good spare workhorse at the very least though, one that is far from the knackers yard. I have another two such systems and I can't tell you how handy these are. They are especially good at running the legacy op systems/browsers and for playing some of the older classic games.
It never ceases to amaze me the amount of kak that comes out. If you are near a window and/or close to a main road, it can be a lot worse. I do a 'service' every six to nine months - a total break down and rebuild. I clean out the Coolermaster Copper Rose chip sinks, the RAM sinks, the chassis and roller fans, hoover the mboard (with a small plastic curtain brush attachment), the Cool Drive 4's and CD/DVD drives then polish the clear case. It's not much fun but it makes a lot of difference and that TIM Clean fluid smells nice.
I wonder, do XBox owners clean out too?
In any case, good luck.

Starts with a R. Rrrrrrrr. Motorbike!