Give the update a try. If it doesn't work, there's always a new card in your future
Suffice to say, any modern PCI-E card will do ya just fine. If you're not gaming, something simple like the HIS Radeon 5450 (
link, $70) will do ya fine without needing a larger power supply.
If you want to venture up to the 5770 (like
this one, $150), I'd also upgrade your power supply to at least 600 watts. What's in your XPS 420 won't handle it.
And if you want to climb even higher, (to the card I got), You can touch the Radeon 6850 (
link, $180) with a 650 watt or higher PSU.
I recommended Radeon cards because from what I've read (at least for the higher 5xxx and 6xxx series) there is typically more performance to be had for the money.
The only caveat is with the 5770 or 6850, you might be a bit tight for space. Make sure you can fit at least 9.5" of card into your case.