Nice -- that computer is a great candidate for some upgrades. You currently have a relatively fast processor (2GHz) that is seriously hampered by not enough RAM and, for games, a woefully inadequate graphics card. Addressing both of those won't make it quite as good as a brand new computer you could buy today, but it could make a huge difference and be like a new computer to you.
How much RAM you add is up to you, just make sure you get the right type. You can use
CPU-Z to identify the type of memory and it might be a good idea to open your computer and see how many empty slots you have (although CPU-Z might tell you that as well). If you only have one empty memory slot, then an economical upgrade might be adding a single 512MB module, to get to 768MB. If you have more than one slot, you might want to add more.
Any recent AGP graphics card from Nvidia or ATI will outperform the 5-years-old SiS piece of junk you have. When deciding how much to spend on that, keep in mind that if/when you buy a new computer or upgrade the motherboard in this one, it will probably use PCI-E instead of AGP and you won't be able to reuse the card you buy now.
However, assuming that isn't happening, more RAM and a decent graphics card would serve you well. 
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