Windows 7 on following system - workable?

The system currently only has 512mb so I'd need to spend £50 to get it up to 2gb. They also want a blu-ray drive added (£67) so I'd end up replacing the gfx card anyway (another £70).

You reckon it would be better to just upgrade mobo and cpu to make sure it can handle win7 properly?
 
Thats what I was thinking clv101. It'd only be about an extra £85 too, so be worth it. I mean what option would you take....

Current system
P4 3ghz
crap motherboard
geforce fx5200 128mb
512mb ddr1 ram
80gb hdd
dvd/cd +rw
micro atx case and 300w psu


Option 1
Blu-ray drive: £67
Upgraded memory 2gb ddr pc3200: £50
Upgraded graphics card hd4650 agp8x: £70
Adaptors: £10
Hard drive £33 (160GB... currently 80GB)
Windows 7 Home premium: £85

Total: around £315


Option 2: For a new system...

Motherboard gigabyte am3 (with onboard gfx): £67
Processor athlon x2: £52
Memory ddr3: £89
Hard drive 500gb: £40
Blu-ray drive: £67
Windows 7 Home Premium: £85
Use existing case/psu

Total
: around £400
 
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