If you are going to spend money on a computer, be sure that the system is capable of meeting the needs of what you do with it. If you are going to be using it for games, then look at the recommended specs on the games you play to see if the system will at least meet that. If you choose a system that is under the specs of the recommended, you will not be happy. Make sure that you look at all your games or programs that you plan on using and find the one that has the highest recommended spec to go by.
As for that Dell, I would not waste my money on that one, it is old and out of date by quite a bit. I would recommend at minimum you get a system that has a quad core processor to take care of future needs, and find one with a graphics card that is at least capable of handling hardware shaders as this is become the standard for the gaming industry.
My personal minimum would include a quad core running at least 2.8gig, 4 gigs of ram, an nVidia 250 or ATI HD 5XXX and a 600 watt power supply. Yours might not be quite as high as this, but getting close or over this would ensure that your system would be capable of playing the games you wish to play and have them look nice too.