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If you're trying to save money, DDR3 is not the way to go. DDR2 is literally cheap as dirt, you can grab 4GB for less than 30 bucks most likely. Hell DDR3 sticks are like 10 dollars/GB, on the low end. I'm fairly sure you can get 8GB DDR2 used for 60 bucks if you look hard. Likewise, the older stuff represents some serious value. I think the main area where performance has really taken off is graphics in the past few years, newer CPUs are fast, but not incredibly so by comparison. I think a lot of people are still holding onto their S775 stuff because it still performs well. Sandybridge is finally at 32nm, but those processors are crazy expensive.
Getting a new hard drive might be a good idea, your old one is probably quite slow and noticably impacts day to day performance (loading apps, etc.). 8400GS is quite crappy as well but I guess you could live with it if you don't play games or anything.
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