Sorry but there is just not one person who is a gamer that should have a GPU that is not at least equal to the 8800GT (on the ATI side if you are an ATI person). These days the prices for vid cards that can run UT3 at max visual fidelity are so low that it boggles my mind:
http://firingsquad.com/news/newsarticle.asp?searchid=20586
Now we should start seeing SLI take off in a big way. Most enthusiasts should be able to afford a dual 8800GT setup now. Even getting two 9800GTXs isn't too big a cost in comparison to what we are used to paying. Finally things are getting better for the average gamer.
You're forgetting a few more things:
- A lot of people don't know how to install new computer components. Sure it might seem trivial to people who know how to do it, but it's not as simple to someone who's never seen the inside of a computer before. Not to mention the fact that a lot of people have Dell-style computers that make it difficult to upgrade anything.
- $149 is still a lot of money to someone who doesn't care enough. Especially when you consider the fact that these people you're describing are probably running older computers, possibly with discontinued CPU sockets, AGP slots, and/or DDR memory. You can't just throw in a new GPU and expect instant performance. Hell, a lot of people are noticing huge gains by going just from an AMD dual core CPU to an Intel dual core CPU. What this means is that it's nearly worthless to only upgrade one component of a really old computer.
- $1000 might get you a really good gaming PC these days but $300-400 will get you one that has graphics that are just as good and is easier to use/maintain, along with other features that gaming PCs don't have. I'm talking about an Xbox 360 or PS3. The appeal of these consoles is that you're paying the same amount on games as you would on PC (if you don't pirate software, that is) but the platform itself is significantly cheaper. These casual gamers you're talking about don't care as much about all the other stuff a high-end PC can do or its subtle benefits (like kb/mouse) so consoles are more attractive options.
Hopefully your mind has stopped boggling.