For a basic editor (and editors are like processors or video cards when it comes to their followings...

) I like Pinnacle Studio. I have used Magix and one of the base Ulead products too. I will repeat some of what has already been said.
2.8-3.2 Intel with a leaning to Prescott is a good idea for Studio. Studio likes Prescott.
If you go with Studio, actually get a better video card, but a 9600XT towards the high end (for Studio). Studio uses DirectX calls to the GPU, so GPU and video memory matter. 64MB is good, but some Hollywood FX stuff works better with 128 (assuming you get S9 Plus). BUT if you are using lots of FX, it is a lot like using lots of fonts and font sizes in a document. Great for kids (which this is), but considered a rookie thing.
2 drives most definitely, and I would consider a 200GB as one. 13GB/hour of AVI video. Edit in AVI then convert to MPEG as it cuts and renders much faster and works in realtime better.
512MB of memory is enough with low end editors. Get 1GB though if you can (as you listed), but 512 is a good start.
If you have a DV camera, don't bother with the AIW, but do make sure you have Firewire covered. I would not use the onboard audio, so consider getting a Creative Audigy 2 with a Firewire port. Works quite well. The AIW works OK for capturing Analog Video, but I would go with something like Studio Moviebox DV instead as there are fewer sync issues (vid through AIW, audio through sound card - tape glitch will put A/V out of synch.)
Get a Pioneer 108 or NEC 3500a DVD drive. Either cannot go wrong. My personal pref is the 108, but the NEC with bitsetting for DVD-R and +R has its moments (some older settop DVD players do not understand +R or -R media well - bitsetting is a 'lie' that tells the player that it is a DVD-ROM disc).
If you really want to go nuts, I drool for a Shuttle SB81P (or is it 83 - always forget, too lazy at the moment). Firewire front and back, holds 3 drives, PCI-e16x, 5 1/2 bay, SFF... umm. BUT, I have not seen an editor using one yet.
@DGath - Pinnacle Liquid Edition. I use version 6, which is just out. It is $500 new, but cheaper than Vegas or Premiere. HD built in. Not sure I would recommend it to someone who does not want to commit to editing yet. BUT, a powerful tool. I have a project that we are shipping the DVDs on that was 16 tapes, 23 marching band performances, 3 cameras, and a full 2 DVD set of all the bands. The new multi-cam feature probably saved me 40-60 hours of editing time (at about 150hours+ now).