Well if it works for you then wait to upgrade the video card, definetly do the ram though, 768 is good for general PC usage but not so much for gaming. If you feel confident enough, upgrade the processor, if you don't feel good about doing that then I wouldn't recommend it. It's a sensitive process, replacing a processor, and there's too much room for something to go wrong if you don't know what you're doing.
But try upgrading the memory, if you experience lagging problems then upgrade the video card to one that will work with AGP 4x, no PCI-E or AGP 8x.
Anyway, I've gotta get some sleep so best of luck with your system

If you have any further questions I can answer them in the morning or someone else here can take over