I have £300 to spend, what do I spend it on?

I'm running a pretty low-end PC at the moment, but I've recently got a bunch of money to spend so I thought I'd get an upgrade.

My specs are:
Microsoft Windows XP
Home edition
Version 2002
Service pack 3.

Intel(R) Premium(R) Dual CPU.
E2160 @ 1.80GHz
1.79GHz, 2.00 GB ram.
Physical Adress Extension.

GeForce 8500 GT

(That's about all I could actually find, I'm not all that technology-minded.)

I've no idea what to actually get, or what needs improving, though.

Also, how hard is it to upgrade your computer? I've never done something like this before and I'm afraid I'll screw something up. Should I just pay a proffesional to do it for me?

Thanks in advance.

Edit: Whoops! Just found the sub-form for this sort of thing. Lock, please!