If you aren't a gamer, I doubt you would notice any difference with a new video card.
Playing games is a different story. UT would run smoother with a better card, and if you buy any new games, it would be nice to have a faster video card that would keep your framerates high.
384MB is plenty for most people, but if you run a lot of applications at once and are constantly switching back and forth, you may notice a performance boost by adding RAM, I'm not sure.
I've got 256MB of SDRAM in my P3 1Ghz laptop with Win2K, and at work, I am usually running Visual Basic 6.0, SQL Server Query Analyzer, SQL Enterprise Manager, Lotus Notes, Internet Explorer, Microsoft Access, and several other apps all at the same time and I don't notice any slowdown or lag time when switching between them.
That looks like a nice system. I wouldn't change anything unless you really think you need it.
And I highly doubt that a system hang would be caused by lack of memory, unless your virtual memory is set too low, and then you should get some kind of error message that you are running low on memory. As someone pointed out, if you don't have enough memory, your hard drive should be spinning a bunch since it is used as virtual memory when you run out of physical memory. The result of this might be a system slowdown, but shouldn't be a hang or crash.