If you are intelligent enough to play Silent Hunter and work out a firing solution, then building your own PC will not be a problem, and I daresay you could do it for a lot less than the figure you are being quoted there if you bought all the components yourself and put them together.
You already have the necessary tools to find out all you need to know in order to build a machine (i.e. a bit of a search on the internet to determine which components are compatible with which other ones). But if you've not contemplated doing this before, I can recommend the following book as a good source of information (see link), and it should give you the confidence to build something from scratch.
http://www.amazon.com/Complete-Idiot...6865208&sr=8-4
The title won't do much for your ego, but it is a very good book.
Putting more RAM or another AGP graphics card in your current PC will probably turn out to be false economy, in that the AGP format is rapidly giving way to PCI, which means that you'd need a PCI-compatible motherboard if you want performance. This is not necessarily a bad thing, as a more modern motherboard will support faster bus speeds, thus enabling you to put more efficient RAM in.
If you do decide to build a PC from scratch, there will be several components you could salvage from your current PC and incorporate (most likely the case, the hard drives, although probably not the power supply as a faster graphics card will probably draw more power - don't forget you might need to stick a better cooling fan in too). However, even having to do that will make it somewhat cheaper than going for a pre-built new PC, as you won't be buying components you already have.
On the other hand, if building something is not for you, I would suggest doing a wider search on the web for something. It always pays to shop around. One advantage to buying a ready-made system would of course be that you could go for something with Microsoft's new Vista operating system pre-installed, as this is generally the cheapest way to buy an operating system, given that new-build PCs usually get hold of Vista for a pittance. Doing this would go some way towards future-proofing your PC a little bit (which is always a good thing when you bear in mind that the Silent Hunter series tends to have a long life and be the subject of many graphics-hungry mods from people).