How much less? I think I spent probably less than $800 upgrading my system. Previously, I had an Athalon X2 (32bit) CPU, with 2x1gb DDR RAM, and a Sapphire X1950XT 256 mb graphics card. It was decent, but was out of date in a year, no joke. I upgraded it in pieces, buying a new case, then eventually stepping up the game to a better processor and graphics card(s). Now I've got a quad core processor and SLI graphics set up. I can run Crysis at medium to high settings, depending on how much dust is in the system (meaning, if the cards are running too hot, they don't like Crysis), with nary a hiccup. HL2 runs at ubermax (not sure where AA is at) with no trouble at all, even EP2 with it's slightly modified graphics. C&C3 also runs at ubermax, with everything topped out, and it's as smooth as a fine glass of aged congnac. But how, you ask, did I do it? I'll tell you.
Price hunting. I spent the time to search a wide variety of computer parts websites to find the best deals. So as not to anger the NewEgg people, I won't mention any other websites, but I can say I did buy some parts from the Egg. So here's what I've got and what I spent (approximately) when I bought it all last fall.
Mobo: MSI P7N Platinum SLI, approximatele $90 from NewEgg after MIR, free shipping
CPU: Intel Q6600, approximately $274 from Unnammed Site 1, free shipping
GFX: eVGA 8600GT new, approximately $100 from Unnamed (Auction) Site 2, shipping included in the $100; XFX 8600GT slightly used, approximately $25 from my best friend
RAM: OZC 2x1gb DDR2-800 PC6400 gold plated, approximately $35 from NewEgg after MIR, free shipping
PSU: PC Power and Cooling 750 Silencer (750 watts), approximately $165 from I can't remember where, free shipping
Case: NZXT Zero, approximately $125 from NewEgg, free shipping
Total: approximately $789.
All other parts, such as HDDs, optical drives, and monitor, I already had. Nowadays, though, prices have come down tremendously. I've seen the Q6600 at around $230 and the 8600GTs around $50. The problem, though, is that my motherboard isn't PCIe 2.0 compatible so I'd have to buy a new mobo to get a new GFX card, but an equivalent is probably around the same or less. RAM has also dropped because of DDR3, and the PSU is a bit of overkill so a small one could be substituted for less money. Combine that with a cheap HDD and optical drive, and you've got a sub-$1000 system that probably beats out anything Tom's Hardware ever tried building.
And a word about the case: It has seven 120mm fans and is nearly silent; I have to be sitting next to it to hear the minutest hum, and I'm pretty sure that the fans aren't making that noise. I sleep with my computer on in my room; only the blue lights bother me (they're kinda bright), but it's not unbearable.
So there's no need to go spending big bucks on a stellar rig when (as the cliche goes) you can do more with less. And if you've already got a rig, but want to increase your power, you can easily save old parts. One of my two hard drives is a Maxtor IDE that's about six years old and still runs fine; in fact, it's my primary HDD.