I would buy more RAM. You can never have too much. Cakewalk Sonar is a very powerful Sequencer, so is Steinberg Cubase. Try the demos and see which one you like. Both Cakewalk and Steinberg offer lite versions of their sequencers.
Personally, I tried Cubase and didn't like the layout. I did like Sonar, and it is less expensive.
You will need to get a good sound card like the M-Audio Audiophile or Delta 44 or the Echo Mia.
I also use a Soundblaster Live for soundfonts (MIDI).