I ran P4 651 with 6800 GT for a time and the P4 was already a major bottleneck even there with games like UT2004 and Far Cry. Your 7900 GS is noticeably faster and the speed difference between P4 651 and 661 is marginal, therefore Athlon 64 X2 6400+ would be much better choice for you even at 1024x768. It's a bit power hungry and can't compete with C2D, but if you already have it I'd say go for it.

I think Cedar Mill P4 is a fine CPU maybe up to 2003's games, but then it starts getting less than ideal if stable 60FPS is what you are looking for.

Thanks for your opinion. I finally decided to go for X2 6400+. I have also added some Arctic coolers (Freezer A30 for CPU and Accelero S1 Plus for GPU) + all new Arctic fans (also in PSU).
PC performs now much better (+20FPS in NSF MW), way cooler and quieter!

Good choice, I remember my first 7800GT was paired with an Athlon X2 4200+ originally and then found a second life paired with a Core Duo E2180 in a build for my niece.