A Couple Questions On A PC Hardware Upgrade For Gaming!

I'm looking to upgrade my PC so that I can play up & coming games such as Crysis, Unreal Tournament 3, Bioshock, Assassins Creed etc on fairly high settings with no noticeable lag/stuttering during gameplay.

The thing is, I'm not sure whether my whole PC needs an upgrade or just my graphics card.


Here are my current specs:

OS - Windows XP Pro
CPU - Intel Pentium D 2.8Ghz
Ram - 2GB DDR 2
Video Card - 256mb Nvidia Geforce 7600GT XXX


With this I can play games such as Oblivion with high settings & no lag but today I purchased a couple of games called "Two Worlds" & "Gothic 3" and after installing them, noticed that they lagged considerably even on medium settings which were to be quite honest, not very aesthetically pleasing.

This made me realise that I obviously need to make an upgrade to my PC if I'm wanting to play some of the games mentioned above.

So which parts of my hardware will I need to upgrade to be able to play most upcoming games fairly high with no lag?

I have around £200 ($402) to spend so if I could be pointed in the right direction that would be greatly appreciated. I was thinking maybe an 8800GT card or would something like a 7800GT suffice? If I can help it I don't want to have to spend an extra £150 or so just to get another 3-5 FPS out of my games. Anyway, I'm really pretty clueless as to what would be my best bet so as I said, I'd really appreciate any help, thanks a lot.

EDIT: A couple more details about my PC...

Motherboard - http://www.asrock.com/mb/overview.asp?Model=775Dual-vsta
PSU - http://www.amazon.co.uk/Trust-570W-Pro-Psu-Dual/dp/B000J5VMZ8