[KarmaKiller]

Ok. Your mobo does actually in fact support most of the newer cards, they are just capped off at 4x bandwidth, as opposed to 8x.
So most any card you find, PCI-E or PCI 2.0, it should technically work.

Now with your budget, and your PSU, I would recommend something like the 9600GT, 8800GT, maybe for the cheaper side 8800GS/9600GSO.
Any of those would work fine.
I'll give you some links.

Newegg.com - ASUS EN9600GT TOP/HTDI/512M GeForce 9600 GT 512MB 256-bit GDDR3 PCI Express 2.0 x16 HDCP Ready SLI Supported Video Card - Desktop Graphics / Video Cards

Newegg.com - EVGA 512-P3-N862-AR GeForce 9600GT Superclocked 512MB 256-bit GDDR3 PCI Express 2.0 x16 HDCP Ready SLI Supported Video Card - Desktop Graphics / Video Cards

Newegg.com - EVGA 512-P3-N975-AR GeForce 9800 GT 512MB 256-bit GDDR3 PCI Express 2.0 x16 HDCP Ready SLI Supported Video Card - Desktop Graphics / Video Cards