Are you AMD or Intel?
Get 2-4GB of DDR2 800mhz RAM -- pretty much any brand is fine, though I prefer G.Skill because the heat spreaders are gorgeous
If you're going intel and you're on a budget, get an E2160, a cheap P35 motherboard, and an arctic freezer 7 for cooling. Overclock it to 3GHz and call it a day. If you can spend an extra $100, get an E8400 and a P35 board with some better overclocking options (Abit P35-Pro or Gigabyte P35-DS3R). The E8400 runs 3GHz stock, but can be overclocked to 4GHz with something like a Xigmatek 120mm cooler or a Zerotherm Nirvana (which I love).
The AMD route is a better bet if you don't want to mess with overclocking. Budget: Get a 4800+ (Brisbane core) and a Gigabyte MA78GM board. If you can spend more, get a 6400+ with the same board. The above coolers can be used on AMD as well.
As far as wasted horsepower goes -- it's really a non-issue assuming you game at 1440x900 or higher.