First, the psu that comes with that case is a POS. It will die within a year, almost guaranteed. If you want, keep the case, and get a decent psu, its so worth it because you are going to have to spend the money anyway. 350-400W should do it. ATX 2.0 is a must. Antec, Enermax, and Seasonic all make nice psu's. You may think that a cheap psu is fine, but this is not a part to cheap out on, its one of the most important parts in a PC.
Second, that motherboard is nice, you probably dont need a SLI motherboard considering you like ATI, but its always a good upgrade option later on. I would suggest this motherboard from DFI with the Nforce 4 Ultra chipset. Its cheaper, and has 2 pci-e x16 slots so you can do SLI with a little modding(ive done it with my board, really simple, Ill give you more info if you want). Also, its one of the best cheap overclocking boards for AM2 around.
LinkageThat WD hard drive is nice, but I like the new Seagate 7200.10 series with Perpendicular recording. They are reallly fast, almost as fast as my 10k rpm WD raptor. The 320gb Seagate is cheaper than that 320gb WD, and its a better drive. They also have a 250gb drive as well thats the same thing just smaller and cheaper.
LinkageThe ram is fine, but get 2 sticks of 512mb for Dual Channel. There is a huge diffrence between one stick and 2. The only reason you wouldnt get 2 sticks is if you plan on upgrading to 2gb in the future. 1gb is fine though. G.Skill rocks btw. heres a nice dual channel kit
LinkageThe proc is great, single core FTL, but its socket AM2 so you can grab a dual core in the future. (the dual core is only $50 more, if that, so maybe a little more now will pay off later)
You really cant ask for much more for $90 on a video card, it will do what you want. Heres where you want to focus your money though, rather than a nice case or a fast processor.
You are right that build will give you a significant upgrade, but if you switch out these things, it will be that much better. Any questions...feel free to ask.