Have to agree with Khell - you're young, your eyes should be good with a cheap 17" LCD for a couple of years. If Oz is anything like the USA, the big box stores run some extremely good sales occassionaly but usually have high prices compared to mail order. With a monitor, it pays to raise the money for an upgrade, then wait for an excellent sale, as B&M stores usually have much better return policies to protect you from a monitor with stuck or dead pixels.
It's tempting to switch to a AMD CPU, which has better bang for the buck at the lower end, but I wouldn't do it. You may want to upgrade the CPU only, and while AMD rules the very low end you are treading, once you hit about $180 Intel begins to rapidly surpass AMD. The 45nm Core 2 Duo Wolfdale cores are extremely fast, assuming they will run on your motherboard, and an E8400 at around $200 US would make an excellent CPU-only upgrade in a year or two. For gaming and almost anything else, Intel simply owns the market from midrange up.
I would definitely not go below a 9600GT for a gaming computer, which are around $120 US after rebate. This is an extremely good card for the price; it's basically half an 8800GTS with the same (512 MB) RAM, but typically runs much faster than half an 8800GTS which runs $190 US and up after rebate. That's probably a budget buster, but you might be able to squeeze in an 8800GT; I've seen those for a little as $160 after rebate. Make sure you get a 512MB card, as there are some 256MB models sold. I think EVG and BFG Tech still have lifetime warranties (original owner, as long as the product is manufactured) and trade-up programs, if you're interested.
You might want to look at the Western Digital 640 GB drives as well. If memory serves the 500 GB models have three platters, while the new 640 MB are two-platter models with slightly faster access times at a nominal upcharge. Just make sure you're getting the new two-platter model rather than the older 640 GB two-platter model; unfortunately I think the part numbers are the same.
Two caveats to all this. First, these prices may not correlate directly into Australian dollars, since more than currency conversion is involved in price differences. Second, you didn't state what kind of games you play. Shooters and other action games usually stress the video card most, while strategic sims may stress the processer more. If the games you want to play are more CPU-limited, then and only then it might be beneficial to drop in video card strength in order to buy more CPU.