Contrary to popular belief, PC gaming doesn't necessarily require a huge investment....

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Case, PSU, CPU, Mobo, RAM, HD, Heatsink $266

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GPU $165

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DVD Drive (optional) $14

Pirated Win7 x64, or download Ubuntu and run all your games in Wine...
Operating System $0

Total Cost: ~$455

4GB RAM, Radeon 6870, Quad CPU at 3.1Ghz.....

This assumes you already have a monitor/HDTV to hook your PC up to, as well as a keyboard/mouse (although the mouse/keyboard could be bought with the $45 you have left over). This also doesn't come with any thermal compound (EDIT: The sink has compound already on it) or tools to put the PC together, but than again that's what the extra $45 is for if you don't have them already.

Obviously, this isn't a high end machine. Your system will probably run really hot, your processor is an Athlon II (lol), you are using 1 stick of RAM on a dual channel mobo, your power supply will barely support your hardware...

But you could still play games on decent settings, certainly better than console. Hell, this comes with a free copy of Dirt 3, a $20 mail in rebate, and you could save $14 if you don't get a DVD drive (you can in fact install Windows through a USB). The motherboard even supports AM3+, you could upgrade to an FX processor.