I'm in a similar situation as Cobra. If you buy at just the right (or wrong) time, you have issues later. When I left for college I had a 4 year old Dell (thank you Dell, for making my model pretty much non-upgradeable), so I built a $1000 machine that would run pretty much anything out there. Now about 4 years later, I've upgraded the ram a bit and the video card, but not much else.
Athlon XP 2500+
1 gig of DDR
X800 256MB (AGP)
World of Warcraft, a 3 year old game, averages 15 frames per second in town. I raid at 8-10 fps, but only because I crank the graphics way down for that. I downloaded the Overlord demo and had to set it to "low" graphics settings for it to be playable.
The upgrades for this system are obsolete, because of the introduction of DDR2, PCI-Express, and 64 bit processors. If I want a new CPU, I need a new motherboard, which would require new ram and video card. ANYTHING I try to upgrade will require that I replace pretty much the whole system. The only things I could really carry over to a new system are the HDDs, CD-ROM, keyboard, mouse, and monitor. The case is a Shuttle XPC, so even that would have to be replaced.