I'd recommend going to at least 512MB of DDR, because you're going to be hurting with just 256MB, and especially if you want to do any gaming. 2nd, that 5600 is not a good buy for the money. The Radeon 9600 can be had for around $100USD. Not the best, but a helluva lot better than the 5600. If you can, the Radeon 9800's are well under the $200 mark.
Yes, the CPU/MB is important, but you're castrating it's performance with the amount of RAM and the video card you're using. It's really unbalanced that way.