Some onboard audio will cut significantly into CPU usage. You may want to consider getting a dedicated sound card. I play games all the time and I've never needed or wanted anything better than a Sounblaster Live 5.1. The Turtle Beach Santa Cruz is also a good choice. You can get the SB Live for dirt cheap online these days.
Now would be a good time to get a video card to prepare for Half-Life 2, Deus Ex 2, Doom 3, Stalker and other intensive games coming out in the next 3-6 months. IMHO, the Radeon 9600 is the best choice out there for the money. I would not recommend a Geforce FX 5200 or Radeon 9000/9200.
The 5200 is more like an update of the Geforce 4 MX line than an update of the Ti4200, by a long mile. The 9000 and 9200 don't fare much better, although they will try to impress you by loading on a bunch of RAM. The truth is that the card architecture for those particular choices will become a bottleneck long before the amount of RAM will.
I don't see anything else in your system that might be making things slow. If you have Windows XP or 2000, I highly recommend
this page for disabling services and freeing up
a lot of RAM for games and such. But his page seems to be down at the moment, possibly because of the massive power outage in the Northeast.