His mobo/CPU can't even use DDR3 so its out no matter what. I would recommend going with some OCZ Reaper (1066) if you can justify $115 for 4gb of RAM. I have it in my comp right now and it is wicked fast.
If you want to go AMD, that's cool but a dual core Intel is about the best of both world's right now. I also just checked the price on a Q6600 (quad core 2.4 ghz) and it's $180 OEM.
For the video cards, ati is currently slightly better but I've always enjoyed my nvidia's. I've owned a 6800GT, 9800GTX and 2 9800GX2's in SLI. I've been happy with all of them. IMO eVGA makes the best nvidia cards but Asus makes rock solid boards.
Your mobo is good, it could be better. It has nice features but don't forget to disable the onboard video card when you install your big card. They will have conflicts if you don't.
Overall you have a good setup but it could be made alot better with another $2-300 in it. If you have any questions, just hit me up.