Sorry about the XP copy; I usually don't include it because I assume the person already has one. I'm glad you found your old CD.
About the video card question: the 8800GTS is significantly more powerful than a 7950GT. Here's a graph comparing the latest video cards in the market. The 8800GTS and 7950GT are in blue:
Video Card comparison at Tom's Hardware
It's a 3Dmark06 benchmark at 1280x1024 with high quality settings (a typical configuration for games). The results are as follows (and I also included the Newegg retail prices):
($410, eVGA Superclocked)
That's a 88.15% increase in benchmark score. If you compare the prices, you see the 8800GTS is 90.7% more expensive (ie: almost double). However the price increase closely matches the performance increase, so it seems those extra $ aren't wasted.
Conclusion: it seems the price of the 8800GTS is well justified, at least against a 7950GT: you get what you pay for.
You may be wondering if the same happens in real life, since 3Dmark06 score is synthetic and might not reflect game performance, for instance. Following the link above you can change the benchmark to a game benchmark. With Oblivion at 1024x768 you get this
. You can see that the 8800GTS indeed delivers a lot more FPS than a 7950GT when stressed.
I should point out that it's not always like this. When the game is not very demanding, both cards will perform similarly. See it here
So ultimately it's not about whether the 8800GTS is worth its price tag (because it is in my opinion); the question is whether your budget can afford it. The 7950GT is still a good card; games are perfectly playable with it (with mid to high graphics quality). The 8800GTS will just allow to max those graphics settings and will last longer (specially since it has DX10 support).