Heck, depending on the games, 512MB on XP is sometimes enough. Won't get the best performance or quality, but they'll run well enough to enjoy. Some less demanding games will run on a Pentium 4 running XP with only 256MB RAM with a 128MB video card (World of Warcraft, RainbowSix 3, and Tron 2.0 for example) on lower settings.
For just internet and such you don't need much. My mates shop here sells a Windows XP, P4 2.8, 256MB RAM, on-board video and sound, and 17" CRT monitor for about $300. Good for budget people.