The graphics card is the most important component when it comes to gaming. One important issue with upgrading a graphics card is making sure you have enough power. I took a look at the dell website to get a little more information about the specs of your PC. If you have not made any modifications to your PC then there should be a 305 Watt or similar power supply in your PC. This will definitely need to be upgraded with the purchase of a graphics card that will be able to play the games of today and tomorrow with some nice visuals. You should at least have a 500-600 Watt power supply but I usually recommend a 700 Watt power supply. This will give you enough power to supply a power hungry graphics card for now and the future. OCZ and CORSAIR make really nice power supplies. The last thing you want to do is buy a cheap power supply that will feed unclean power to your PC.
I hope this helps you a little in your decision making. If you have any other questions just send me an email.
Another issue that you may have is being able to install a graphics card into your case. But judging by the pics, I do not see why you should not be able to. If you have the money I would recommend one of ATI's 5800 series graphics cards. I currently have a Radeon HD 5850 and it plays crisis on all high settings and will definitely be able to play future games. ATI's newest cards are also very energy efficient and should be able to run two ATI's Radeon 5850 with only a 600 watt power supply. If that is not in your price range a Radeon 4890 will also be a very good choice but they are becoming harder to find.
http://www.amazon.com/XFX-RadeonHD-4890-Graphic-HD489XZSFC/dp/B002Q0V7SQ
http://www.newegg.com/Product/Product.aspx?Item=N82E16814102857
Your CPU should be able to handle most games because the graphics card will handle most of the workload.
Another problem I do see is the amount of RAM that you have. 2GB is pretty much the least recommended amount of RAM when it comes to a gaming PC, but it should not be too much of a problem for now. If you do plan on upgrading your RAM I recommend that you stay at a limit of 6GB. There is not much of an increase in performance after 6GB of RAM.
So to tie it all up you can simply purchase a power supply and new graphics card to save yourself a decent amount of cash. It will last you a while and you will be able to save up money for upgrades in the future because you will eventually run into the problem of not being able to upgrade any further. If you think you may need to upgrade the RAM and CPU then I highly recommend you start from scratch and go with an AMD 955, 790X ATX AMD Motherboard, 6GB DDR3 RAM, Radeon HD 4890 or 5850, and an Antec 300 case for the main components. Going with AMD will save you a good deal of money and get the performance you need. Newegg has some pretty good combo deals for AMD processors. If you have any further questions just send me an email and I will be happy to answer.