you need a better gpu for any serious gaming. unfortunately your psu wont allow you to upgrade your graphics card. so you would need to replace that as well. your cpu is also low end but it should be able to pump out decent frame rates in the majority of games.
you will be able to play old games ( say 2006 and earlier) and games that arent very demanding, like amnesia. I don`t know if you will be able to max it out. maybe if you play at low resolution.
If you want a seriously powerful gaming, rig, I would build one from scratch. you can reuse your hard drive, memory, dvd rom and computer peripherals; it will cost you maybe $800 for a mainstream powerful rig. Alternatively, you can replace your graphics card and power supply ($150 and $50 respectively) and get a better CPU ( $100-$150).
If you are interested in upgrading or getting new system, let us know your budget and your monitor resolution so we can give you more detailed suggestions.