I would go with ATI, at least their HD3000 series, more preferably their newer HD4000 series. Problem is it they are gonna be above your cost range, but at least get something in the HD2000 series or higher. Even the HD2600 or HD2900 would be a decent choice, I have the 2600 in my iMac (because that's the best they had at the time) and I can run most games with med settings in native resolution. The newest games are getting to where I have to turn down the resolution, but go for a 3000 or 4000 and you should be fine, or the HD5000 if you have the money!
http://www.amd.com/us/products/Pages/graphics.aspx