By the time you max out the cpu/ram/upgradeOS,...... you are the price point of some entry level machines.
Since I don't care for Vista, what I would do is buy XP OEM full edition online, a new mobo/cpu/memory, and reuse everything else. Ebay the old motherboard/cpu/memory and enjoy the power of your upgraded PC.
If you shop smart, you can find XP home for $100 or Pro(recommended) for $150. A motherboard, with everything inclusive(graphics/nic/sound) for $50-$100 depending on CPU chosen. Cpu from $50-$200. Ram is cheap and 2gb shouldn't cost more the $50. Hunt for rebates/closeouts since I doubt that you need the newest fanciest graphics CPU or other geek geewhiz stuff.
Visit xpbargainscom, techbargainscom and slickdealsnet for great stuff on sale.
I usually just buy at newegg, tigerdirect, zipzoomfly, buycheapsoftware......
Typical upgrade for older PC:
motherboard $65(socket 775 motherboard w/graphics/sound/nic, make sure it support 1066/1333-FSB, 4gb-ram, pciX, for future upgrade)
CPU--2.0ghz conroe celeron $65, or E4500 core2duo $130
memory $50(2x1gb ddr2)
windows xp pro($150)
The above won't tax older power supplies and can be made to fit any microATX or ATX case(typical).
What are the details of your current computer? case? mobo brand/type? power supply wattage?
Besides hating Vista, just about any 'branded' store bought PC is hard to upgrade, and IMO a waste of money.
For your current PC, 512mb PC133 is an easy upgrade($50 on ebay). PentiumIII 1000-1400, depending on motherboard compatibility, can be found on ebay for <$20. $100 for win OE home XP. ~$170 and you're IPOD ready but no future upgrades capable.