3 years really isn't that old. I mean, it is if you
need to run the hottest latest super-spiffy stuff, but for most people, three years just isn't that old.
Heck, my room-mate in college bought an IBM with dual 333's, ran that thing for about 7 years. My current machine is a 1.5Ghz machine with .75GB of RAM that I built a long time ago, and it's more than adequate, still.
On power supplies: a shiny brand new power supply should run about $50. A really super-spiffy one might be a little more expensive. It takes about half an hour to install. In my book, $500 is a darned cheap computer, but $50 << $500. And if you just replace the power supply, that leaves you $450 to spend on the Porsche!
Cheers,
Dan