You are right, ram is very important. I didnt want to get into too much detail but, for ram go with at least 512mb base. I went with CPU first because RAM can be added in addition to the existing amount. Where a CPU has to be replaced. I would rather see him spend $200 on ram and $350 on the CPU than spend $400 on ram and $200 on the CPU. 512mb of ram on a Athlon 64 is much much faster than 1gb of ram on a Athlon 2000XP.
What you can do is spend less on Video card and processor and get lower end stuff (NOT low end just LOWER THAN INSANE END) and spend money on cooling systems and power supplies and then overclock the shit out of your hardware. At least get a DX9 card though to take advantage of new tech...