Your graphic card sucks (it's the problem), so $400 is way overkill, $300 is overkill even. What's the point? Any remotely new piece of hardware is going to be totally bottlenecked for gaming. If you have less than 4GB of RAM, then get the cheapest 4GB you can find and toss it in. 1066Mhz, 12CAS? Whatever, go for it, faster is pointless. Look, you can spend $300 and get 5-10FPS more. Is that worth it? Will that even play GTA5? Barely.
On the other hand, you can save up another $250 to make it $650 and just buy a new mid-range gaming PC (parts and reuse your HDD, etc) with a new GPU also. If the rest of your hardware is on par with that GPU, there's no point in "upgrading". You need a new-new computer, buddy o'pal.
Look, I've got a GTS250 system (about as terrible a card as yours). My CPU died on me a few months back, so I had to get a new MB+CPU combo while I waited for the fall/winter games to come out to upgrade the GPU. So, I have very direct experience with this. I would not have "upgraded" just the CPU/RAM on this rig if I had a choice in the matter. The end result? Yes, it's a bit smoother, but the GPU still caps the system totally. I spent about $225 on a new MB+CPU (PhenomII 925 -> i5 3350K). Did next to nothing for the cost. Now, the 7850 will do something when it slides in next month...