EDIT : Upon closer inspection of the OP and not rushing, it should be able to play most games reasonably well but as I said the GPU will be starting to feel dated... but should run most newer games perfectly fine at medium settings and really anything pre-2007 barring ofcourse Crysis at high/max settings at good frame rates.

Games that should run well on that system:

Half Life 2
F.E.A.R.
Left for Dead (infact any source game)
Trine
Medieval Total War 2
Elder Scrolls IV Oblivion
Dragon Age
Mass Effect
Colin McRea Dirt
Burnout Paradise
Prince of Persia (2008)
Supreme Commander
The Chronicles of Riddick

I would add others but it automatically double spaces in 'Edit' mode.

Well as you know the the current GPU kinda dated and was a mid-low card when it was new so you won't be running many big recent game above low. What card you looking at replacing it with?

There are however plenty of indie and old games that you should be able to run fine. If you want something like Diablo you could look into Titan Quest and Torchlight probably the best games of the style since D2 and you should be able to run them both on high to max. Mount & Blade can be tonne of fun (get waband or with fire and sword not the original) and are not to GPU heavy and should run nicely on high. Minecraft/Terraria would both run great and offer something different to most games. The first Crysis should run ok at mid to low and is widely regarded as better than 2 tho I have only played the first and liked it well enough but it's not exactly a "great" game. Anything Source engine should run on mid to high depending on age. Starcraft 2 should run on low to mid. And that is about all I can think of ATM

Given that you're going AMD, remember to take an AM3+ mobo and nothing else.
Bulldozer will be out in a few months, and that's the socket it'll use. It's backwards compatible with AM3 CPU's like the Phenom II. Heck, I'd buy a real cheap CPU now as a placeholder and then shell out for a Bulldozer one. I don't see a real point in getting a top-of-the-line Phenom II ATM.

And yeah, the GPU is the only other misstep.

Well if money is not really a problem I would suggest improving the GPU to a HD 5770 at least, the 5770 infact is a very good little card.

I have a 5770 myself and I can run most games pretty well near max @ 1080p exept for the Witcher 2 lol that's a beast

Same, Infact this is my system

CPU - Phenom X2 550 3.1Ghz         RAM - 4GB OCZ Reaper

GPU - HD5770 Vapour-X 1GB          and a 1TB Caviar Green HD

and I'm able to run pretty much all games in max, the only one I can think of that had any real issues was Metro 2033 which is just silly.

Ha I have a phenom X4 955 3.2GHz and 8GB (of overkill for what I use the PC for) RAM

but a stock 5770

I added a list to my first post of a few games that would run well, not all of them are new but they are all good

-Half Life 2
-F.E.A.R.
-Left for Dead (infact any source game)
-Trine
-Medieval Total War 2
-Elder Scrolls IV Oblivion
-Dragon Age
-Mass Effect 1/2
-Colin McRea Dirt
-Burnout Paradise
-Prince of Persia (2008)
-Supreme Commander 1/2
-The Chronicles of Riddick

Expanded List
-Borderlands
-Command and Conquer 3/4, Red Alert 3
-Star Wars The Force Unleashed
-Street Fighter 4
-Warhammer 40K Dawn of War 2
-Horoes of Might and Magic V
-Lara Croft and the Guardian of Light
-Magika
-Mirrors Edge
-GTA 4
-Race Driver GRID
-Comapny of Heroes
-Dead Space 1/2

Not all of these games will run smoothly above medium settings and may need to go down to lower resolutions in order to crank up special effects but they should run reasonably well to perfectly fine.

I highly disagree with anyone saying that Phenom II's are a waste of money. My specs are as follows:

AMD 1100T Black Edition 3.2Ghz
2x Radeon HIS HD6870
8 GB 2000mhz Corsair Dominator RAM
Gigabyte UD3 Mobo

I would suggest going with the 6870 man, best price for the performance you can buy right now. I can run anything max settings that is CPU reliant as well any game on the market, as well as being a part-time web-site and logo designer I can run up to 20 Adobe suite apps, plus Cinema 4D and Lightwave without my processor breaking a sweat. It is an excellent purchase man and will be plenty for at least 5+ years.

Oregon Trail.