Yes you can probably add more memory and a very small video card.
You have 4 memory slots and can probably benefit from going to 3 GB. What mix of memory do you have now for the 1.5 GB - how many sticks, of what size and what is make and model- also what speed (MHz) which should be written on the modules. Note that you have DDR2 which is a little more expensive than the current DDR3 memory.
You do have a PCIe x16 slot to add a video card, but you will be severly limited by your power supply, which is only 300w, unless you decide to change it to - (getting a decent PSU would cost about $40 and would greatly increase the size and range of video cards you could accommodate. The quality of a CPU is almost as important as size, can you look at the PSU inside the case and read the make and model off the label?
To look at some upgrade options for the video card, take a look at this site which provides a range of recommended video cards for different budget levels and also shows power requirements and provides some performance data.
Best Video Card Uogrades for Non-gaming Use
With only 300w, it is possible you might need to consider some other cards as well. So after you take a looks at that site and consider the above - tell us what is your preference - get a new upgraded video card only or a card and PSU?
With a few upgrades, you can significantly increase gaming performance. On the other hand, you don't want to put too much money into an older system
Here is a link to specs on your system.