Budget Gaming Experience

I'd like to see an article built around the experience one can expect when playing games on a tight-budget rig, or one that has otherwise been constrained. The question to be answered is, is it really necessary to have a $200 CPU and $300-$400 GPU to enjoy games? For example, use a system with the following specs:

CPU: No better than an Athlon II X2 260 or an Intel Pentium G620; perhaps a last-generation 7850 or e5200.
GPU: GT240, GT430, or HD5670; certainly no better than a HD6670.
RAM: 2GB

Resolution: 1366x768 AND 1920x1080

No, it won't do well in benchmarks, and probably won't come near to maxing any current title, but what about favorites from 2-3 years ago? What about current titles on "medium" settings? The screenshots and trailers I've seen of even new titles (e.g. BF3) at "Medium" look pretty darn good.

Yes, there should be FPS benchmarks, but I'm most interested in the opinions of two distinct types of gamers:
A. People used to playing on maxed-out rigs; does the loss of eye-candy make the experience insufferable, or are the games still enjoyable?
B. People who are used to consoles, or even previously non-gamers. Do they enjoy playing on this system?

For both groups, does the type of game matter, or whether it is single player or multi-player?

Corollary: If the experience is too poor to be worthwhile, does a minimal upgrade to a HD6770 salvage the situation?

Thanks.