it's a pretty nice computer, it will definitely run most games with high settings.
As for the cpu, well I'd get something else. If you are going to get an intel then go with the core 2 duo series. So much better, and they aren't too expensive either. Definitely the best cpu's on the market. Or then you could get a nice amd dual core for a little cheaper than the core 2 duos.
Something like this: http://www.newegg.com/Product/Produc...82E16819103735
The cheapest core 2 duo is the E6300, and it's around $180.
And another gig of ram wouldn't hurt, though that 1gb will be great too if you don't want to spend more money.