that's a really hard question to answer dag.
so much is dependant upon the dollar amount you're willing to pay - and there may be a couple 'hidden' charges even should you wish to simply upgrade the mobo.
while i'm not sure about gateway products, i do know that both dell and compaq use/used proprietary cases that would hold ONLY their mobos. this means that should you ever wish to upgrade, you'd have to purchase from them as a 'standard' size would not fit. tricky? yes. crappy? yes.
my guess is gateway is the same - you need to find this out before you move forward with ANY plan.
also, looking at the specs of that model, it's easy to see two additional upgrades - one necessary and one not quite so - just to play most new games.
this model comes with but 128 meg memory. that is not enough to play almost any game that has come out in the last couple years (at least well), and it also had but a 20 gig harddrive. with an OS and any big games (along with their saves) you'll be out of room very quick!
personally, i would never purchase a computer with onboard video - it's just poor quality - but then i'm an avid (to put it mildly!) UT2004 player and onboard vid could not handle a FPS.
onboard sound, however, is a different beast - the new(er) nforce2 and 3 mobos all come with onboard sound and it's actually quite good! thus no need for the soundblaster purchase. <img src="/ubbthreads/images/graemlins/eek.gif" alt="" /> they also have a couple built in nic so you can LAN! woohoo! <img src="/ubbthreads/images/graemlins/biggrin.gif" alt="" />
you could purchase all the items needed to build your own computer for about $700 - $750, this would include an OS (xp home), but NOT a monitor.
you could get a similarly configured system at someplace like abs computers for about $900, though it would include a lot more bells and whistles.
if you decide to upgrade, you should look into a new mobo and cpu (i highly suggest amd for your processor - much cheaper than intel for a lot less $ and same performance), at least 512 memory, an ati 9600 vid card (at the lower end, ati is simply a better product than nvidia - only the top of the line nvidia beats an ati right now) and perhaps look into a 60 (or so) gig harddrive.
also (important!), check your existing power supply. it may not be enough to handle upgrades and is VERY important.
on a positive note, upgrading is usually very easy. if you decide to go that route, you could probably do most of what you'd want fairly economically with a few hours work.
hope this helps a bit.