Hiya Pugzi,
I agree with what Jephree says here about upgrading. From what you're describing, it sounds like an upgrade to 2GB RAM will definitely help your multi-tasking. That's really cost-effective too. And you may well be able to get a better graphics card (but not a brilliant one if you only have AGP 4X support). However, video editing performance and games performance is still going to be stifled by your processor. All things considered, there isn't a whole load of scope there and upgrading all those parts won't be very good value for money in comparison to what you could get out of a new PC.
On this occasion, however, I actually don't agree with Jephree about your options for a new system. I think I've got something that's right up your street (I'm a Dell reseller). For around £600 + VAT, you can get your hands on one of Dell's new Vostro PCs, with a beefy dual core 2.3GHz Intel Core 2 Duo processor, 500MB hard disk with hefty 16MB cache, 2GB RAM, 256MB high-definition graphics card and a 19" widescreen flat panel. For a little more than your budget, you can get two screens. Take a look at our web site (link in my signature) and take a look at the 3 example systems on the Desktops page - I'm talking about the middle one. If you want something different, let me know and we'll do you a quote - we beat Dell's UK online price 99% of the time.
I'm not trying to blatently advertise here - the reason that I think a Dell could be good for you (apart from the new Vostros being really good value) is that Dell still let you configure a brand new PC with Windows XP. 95% of the new PCs that we sell still go out with our customer choosing XP instead of Vista so I understand that you might not be that keen on the new OS.
Also, regarding your concerns about copying your documents, photos, etc., there's nothing to worry about there. Windows XP comes with a utility for this very purpose. Go to Start > All Programs > Accessories > System Tools > Files And Settings Transfer Wizard. This actually works really well - it packs up all your stuff into one big compressed file that you can then copy to DVD, USB drive, online backup drive, etc and later restore to your new PC easily
Hope that helps