celerons aren't the best for gaming, but you said you won't be playing the best games, so we can work with it. yes, i would add another 512mb of ram.
for graphics card, that depends whether your motherboard accepts AGP or PCI-E.... either way, a 6600gt (less than $150) or a 6800gs (less than $200) would probably be a pretty good choice....
Is your processor a Celeron D? if so, does your motherboard have any overclocking options....because those processors tend to OC very well and it might be worth looking into to get more out of your CPU.
Intel E8400 @ 3.78ghz
8gb (4x2gb) G.SKILL DDR2 1600 @ 420mhz, 5-5-5-12
ASrock P43Twins1600 (hates RAM dividers)
WD Caviar 500gb + 250gb hdd, 32mb cache
eVGA 7900gs @ 585/1700mhz
OCZ GameXStream 600w PSU
Sound Blaster X-Fi Platinum
Cooler Master Centurion 5 case