cheapest upgrade would be ram. actually didnt knew win7 could run with less than 4gb :O
and yeah that gfx srsly need update but that can be sort of expensive. however, in your case, even the cheapest graphic card would be an excellent upgrade 
cpu is fine imo no reason to upgrade when you have limited money. its a good cpu.
you should consider replacing your harddrive with a SSD. in my world, this upgrade is the best value for money.
http://en.wikipedia.org/wiki/Solid-state_drive
Window 7 32bit only requires 1GB of RAM.. It can also only use 3-3.5GB of RAM.
So If you were to upgrade your RAM there's not much point in going above 3GB. (This is dependent on your motherboard however, some work more efficiently when running pairs of RAM (not the same as dual channel) so you may have very slightly better performance from 2x 2GB of ram than 1x 1GB and 1x 2GB, even though you will still only have 3GB of usable RAM.
A better graphics card with more dedicated graphical memory however would be a much better investment.
(Make sure you turn off all unnecessary programs running in the back ground)
A SSD isn't going to do much for this (unless you currently have a really old HDD). It would also require you to re-install all your programs, or clone your current drive.
Summery
If you're on a tight budget, the graphics card is the most cost effective way of improving your fps. Just make sure you have a decent PSU so you don't destroy your motherboard/CPU
Other upgrades such as RAM will help but aren't a priority.
