I've always heard that buy the most expensive option that you can afford (in most cases, and after reviewing the products) because you'll save money because you won't have to upgrade as quickly again.
It's bad advice.

You should spend less each time (and/or sell your old parts) and upgrade on a regular basis instead. Over a long period of time, you get a far better return on your money that way.
Video card: well, I'm almost flat broke so I'm gunna have to run on my X850 Pro for now until later.
If you play games more than just occasionally, cut corners somewhere else to get something decent here, or else your new system will be barely any faster than your old one. Keep your existing case, get a E4300 instead, cheap motherboard, whatever. Wait for the new cards coming out next month though.
quick question, would it be worth the extra 50 or 60 bucks to buy 2 more gigs of the RAM I jsut bought and then get a copy of Vista and use that or should i stick with 2 Gigs only and put XP Pro in?
No, if you wanted 4GB of memory, you should have gotten two 2GB sticks. Many boards don't work well with four sticks.