I would say upgrade you graphics card 1st and fore most. Diablo 3 is going to be a big GPU hog (if you played open beta last weekend you may know by now).
I tested beta with a GeForce 550Ti and it ran fine until I hit packs of mobs in group play (4 players in a game). When we smashed through groups together my fps dropped from 70 down to 20ish. The addition of 4 players and all the spells going off really hindered game play, nothing to that was not playable but it was something I didn't like. Since you can't SLI I would say go with a
GTX 560 model GPU (2gigs of ram on the card if you can afford it) the 2 gigs will def help out on trying to load up all the scenery, mobs, & spell details that are going off in game. If not, you can jump it down to a 550 but be prepared to address the issues I faced when it comes to playing with groups and packs of mobs with spells going off.
I would really recommend 560 with 2gb ram on the card.
The 550 right now is about $119.00
The 560 is anywhere between $170-$194 but include various rebates
[EDIT]
Just seen your power supply, you will probably need to upgrade it to @ least 400 to be on the safe side.