Right now your video card is the larger bottleneck but your CPU is also, already a bottleneck to a much lesser extent. Once you have upgraded both of those you will find your 4GB of memory also a bottleneck... perhaps not strictly in FPS for every game, but things like level reloads can take several times as long if you don't have free memory to cache the game files.
So, basically it's about how much you will spend in total eventually, and how long you will keep that configuration before the next upgrade cycle.
As others already mentioned the video card is the place to start. $200 range card gives some breathing room for awhile. Figure out what brand your unknown brand PSU is. Most major brands should be sufficient even if someone poo-poos the brand or model for not really being worth 700W but rather a little less, BUT there are some generics marked 700W which are sort of a joke, couldn't run at 400W without early failure and risk to other components.
So, if your PSU doesn't seem capable you should replace it. Not necessarily with a high cost major brand 700W PSU, it could be that even a $20-$40 after rebate (USA deals found on AT and elsewhere) 420W or higher major brand PSU is a sufficient upgrade, unless you have later plans for a high end video card or SLI/crossfire two cards then it will depend on how much future-proofing you want to pay for ahead of time.
However, I don't think an eventual CPU upgrade is prudent to plan at this point, it'll be too little too late. AM2/780V mATX board is of low value and since you may eventually want more than 4GB memory, I would wait a while and replace motherboard, CPU, and upgrade memory to 6GB+ all at the same time.
For now, consider overclocking the CPU. Assuming 45nm process size I'd expect it to hit around 3.6Ghz without much fuss, though if you're using the retail packaged heatsink then you may find the resultant heat limits you to a bit lower speed.
On a side note, your current motherboard, CPU and 4GB memory could make a nice start to a HTPC or fileserver, I'd think you shouldn't have much trouble finding a new use for them when it comes time to upgrade, or someone to buy them if the price is right.
PS - running different memory is not a problem so long as your bios can deal with that and run in dual channel mode, just remember that it needs to run at the (s)lowest common denominator, meaning the higher timing numbers and/or slowest clockspeed from whichever memory has the worst specs. That won't make enough difference in this system's case to notice, nor does it make nearly as much difference on any system as it did in years past unless we're talking really high end.
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