Many questions, and some good ones.
Before you spend money on upgrades do some research.
1. What is the system I'm going to install it in and what do I need? Video cards are good upgrades IF your PC is only a year or two old. Yours is pretty old so you may need to look around for compatible cards. If I was you, I'd upgrade the system. P4's are pretty slow these days.
2. What are your needs. Gaming is very demanding but set your budget in accordance with your needs. You may have to buy an older card to get better performance to stay in budget.
3. Some games will certainly work well in mediocre machines, other games will render even the most powerful machine into a slow box. So compare your results with various games.
4. The cost of the cards has to do with how they are made. nVidia produces a reference card and chipset, the manufacturers either beef them up or they don't, and that why the cost is different. A 8800GS is not even close to a 8800GX2 by comparision even though the reference board is the same.
5. Stay away from OEM PC's like Dell, HP, Toshiba, etc. for gaming rigs. Some of those have specialized machines but your going to do a lot better with a well designed game rig using current and available parts. Of course you will also pay more as well.