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small solid state harddrive for your OS and 1 game or two. doubles boot speed and game loading time, etc.
windows 7, dual or quad core, 2.5-3 ghz
all ram is ddr3 now, get 4-6 gigs
buy a 150-250 dollar video card. Dual video cards has never really paid off, the market moves to fast. But if you have money to burn I guess you could try it.
don't bother with blu-ray, it'll only get cheaper in the coming years.
Stock heatsink/fan is probably not good enough these days.
if you learned anything from going from ME to XP, never buy the upgrade plan. It's worth it to get the clean slate CD. (unless the difference is 200+ dollars)
For XP->Win7 you still have to do a clean install, I just have no idea how it authenticates (if at all) that you actually had a legit XP license to begin with. It might just ask you for your XP key. In any case, the disk should be the same as the full install and you can legitimately use the upgrade license if you're going from XP->7.
Video cards, wait until at least Nvidia gets their shit out. Hopefully that'll make prices more competitive.
Yar, it verifies your XP key... but I would 100% advise the upgrade, providing you have *a* valid XP key. Its the full version (requires a clean OS free partition), for $19. Simple.
Also, you still want the highest CPU clock you can afford. Even if its only dual-core... I've done quite a bit of reading, and quad-cores don't show performance increase in any(?) games, and quads actually show a decrease with some games.
3.4G dual vs. 2.5G quad, the dual wins every time.
I think you do a little research, you can spend $150 on a video card and be very happy for a year or two.