Hi Colin,
Good question about the upgrade mate, and I would very much add my recommendation to go ahead and do it.
Your computer spec seems average, with a decent enough processor and a nice chunk of RAM. That 128Mb video card certainly isnt up to the rest of the spec you mention.
I would also recommend something like that Gigbyte nVidia video card which Dombrasky linked to in his post.
I run a similar machine to you; and I run it as a Media Server and currently have an nVidia 9800 GT (1Gb) in it. An older card by todays standards, but cheap to pick up and really great performance AND reliability (a key point worth considering for any video card)
The Windows Vista issue I would only worry about if you feel that the Operating System is unreliable, crashing often or you need software which only works on WIndows 7.
Dont go Windows 8 chum - or any BETA route for that matter - can be a nightmare if you dont know what you are doing, and / or you dont like spending hours tweaking and rolling back driver installs and setup features. yuk.
Hope it helps mate.
