I have a Core i7 860, 4GB RAM and a HD 5670 and I can't even play CoD4 with decent framerates at high quality. I have to play the game at low quality @ 1024x768 to get more than 60fps.
I've bought a GTX 460 768MB for like R2200 a couple of months ago and that allowed me to play CoD4 at maximum detail on 1680x1050 on a Pentium 4 3GHz, although the framerate wasn't that hot.
Now my gaming PC has 2x GTX 460's
From my experience, I can tell you that it is DEFINITELY worth it to spend more on a decent graphics card. The same goes for people spending R10k+ on a gaming rig. Like you often see that people spend R10k on a PC, and then simply spending R1k-R2k more, you would actually double your framerate!
I would really advise you to get AT LEAST an AMD HD 6850 or save till you can afford it.
The CPU that Ancalagon suggested is pretty useless when it comes to gaming, seeing that it has no Level 3 cache. Also, it's not necessary to spend R1200 on a motherboard that has USB3, when you can get one without USB3 for much less.
I've had a motherboard with USB3 since the beginning of this year and I've never ever used it.
My CPU doesnt have level 3 cache - its an Athlon 2 X4 630. Yet it runs StarCraft II, Supreme Commander, BioShock 2, Fallout 3, Crysis, etc etc.
Yes, L3 cache helps. Its about a 20% help. The problem is it comes with close to a 100% price premium. nearly 100% extra CPU cost for 20% performance gain? No thanks.
The USB3 mobo is only because it was good as far brand, price, chipset and upgradability (4 ram slots, full size ATX) go. I didnt choose it specifically because of USB3.
And you miss the point - the OP does not have R10k, or R12k, to spend on a PC. It would be nice if he did, in case I would recommend an i7 and a 6870, but he doesnt.