unless your wife games...you're upgrade path is probably just a low end GeForce 8 or 9 series of ATI HD 3 or 4 series for HD acceleration which for PCI-E shouldn't run you more than $50. The a Geforce 8600GT or 9600GT or Radeon HD 4650 would all be more than enough for the rest of the system.
In the event that she games, I'd say a 8800GT or HD 4830 are good fits for your CPU. Any more powerful and you're wasting cash because you're primarily CPU limited.
Hardware asides, I've realized that the biggest bottleneck for old systems is actually the accumulation of software residue from all the installed programs that have to load from the hard disk when the computer is turned on. These background task really chew up system resources, and I'd say find out what your wife normally uses the computer for, then go into the boot/services/startup in the msconfig options and disable all the programs that she won't be using. She can still manually turn them on later, but trimming off the fat from what has to be loaded from the HD to the RAM probably does more towards a snappier system than a new GPU.
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