Will this pc be able to play the latest games at their potential?

Don't listen to the other guy...... 8 gigs is a freakin overkill and half of it will go to waste if you don't use 64 bit os. Your pc is fairly good, quad core is more than enough. If you want to upgrade you can increase ur ram to 4gigs and get a GTS 250 or a 5870 ATI. You can play at high settings even with ur current GPU since your res is pretty low.