My asus 8800gs 384mb was $53 canadian after MIR. Does ati have any card thats as fast for $50? Don't show me a $90 and tell me it's comparable.

No. But that card is two generations out of date and is likely being reduced to sell off stock (and is therefore a one-off event). While this might sound like backtracking, I meant current-generation cards still being produced. The 8800GS isn't even in Newegg anymore (largest US retailer) - it has been rebranded as the 9600GSO, which is sold around $80 USD.

The closest I can find (though it's in USD, because I don't know a Canadian retailer) is a 1GB HD4650 for $54.

http://www.newegg.com/Product/Product.aspx?Item=N82E16814125248

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EDIT: I found a Canadian retailer, NCIX. Its 8800GS is now $63 (huge increase, to be expected of End of Life cards). It's rebranding, the 9600GSO, is $100 at best.

 CPU - Far too slow.

Just get yourself a setup based on an Intel Q6600, cheap overclockable, reliable, mature. value.

Completely unneccesary for games. The CPU has much less impact than the GPU anyway, but getting a fast dual-core at a cheaper price would be better in the real world. Oh, and that requires a new motherboard.

But I think any money you have should go on the GPU. The 4400+ won't bottleneck a fast GPU in most games, and even a modest upgrade to an Athlon 7750 would suffice. The 7750 is matches the E5200 by the way, so it is matched at its price with Intel.

No, it's okay. It's good enuff to shuffle data to the GPU in grafix intensive games (95% of all new games). 

That CPU (AMD X2 4400+) will only bottle neck to some degree in games with a huge amount of AI calculations, such as the most advanced RTS-games Supreme Commander and World in Conflict. ssj12 claims his CPU is too weak in L4D, which is awkward since Valve usually dont demand high specs.... but that can have something to do with many and/or complex AI calculations for tons of Zombies hunting you I'd guess.

That's bollocks for canadians. The cheapest I found was ~$80 after rebate.

http://www.directcanada.com/products/?sku=11830BD3335&vpn=GV-R465OC-1GI&manufacture=GIGABYTE

8800gs, while the price has gone up slightly since i bought it (blame the falling canadian dollar), still much cheaper:

http://www.directcanada.com/products/?sku=10530BD4730&vpn=EN8800GS/HTDP/384M&manufacture=ASUS

the 8800gs is very easily overclockable as well. Mine is at 709 / 1702 / 902.

I know. I've already agreed the 8800GS is much better value than the 4650. However, the 9600GSO has completely replaced the 8800GS in the US (and Canada soon) as it is the same chip (so same performance) but rebranded, and is more expensive than the 4650 in Canada. So, the part which Nvidia intends to compete with ATI isn't better value.

You need a better processor. And 4870 is a lot better than 9800gt.

Your upgrade plan looks OK, because you are very RAM short. IGB is just barely enough to run the OS let alone a game.

But in case you are still thinking about a possible replacement for something with better growth potential, there are some decent after Xmas sales.  For example I saw this one at CyberPowerPC 

I like Cyber Power because they are one of the few that lets you selecy brand. not just type of RAM etc. This model is CrossFire ready it you want to go full bore for the price od a 2nd GPU.

 Socket AM2 AMD Athlon X2 6000+

Just an idea I toss out for you to consider.