Looked up a few more parts, to save you from that ridiculous DVD drive price.
Here's the PC I'm recommending:
CPU: AMD Phenom II X3 720 ($120)
Graphics: AMD Radeon HD 4850 ($100)
Motherboard: Gigabyte GA-MA770-UD3 [AMD 770 chipset, Socket AM2+] ($75)
4GB DDR2-800 RAM [5-4-4-15 timings] ($48)
640GB HDD ($75)
DVD Drive/Burner ($29)
Case + 500W PSU (~$100?)
Windows Vista OEM ($100)
About $650 for the whole thing, and as I said will play anything you throw at it.
Concerning Windows, you have to choose whether you want 32-bit or 64-bit, or even whether you're going to wait until Windows 7 in which case I would wait until it comes out then get a DirectX11 video card, should be a lot faster at the same price.
I haven't chosen a case as it's a personal thing, but get one with a PSU already in it and remember it's cosmetic so don't go overboard.
Also if you have more money than $650 to throw at it I can suggest some faster parts - Radeon HD4870 or a quad-core Phenom. But only if you need it, if it's just 1600x1200 gaming on High then this'll be great.
