As others suggested, the onboard graphics GMA 950 is barely enough, and of course since the motherboard only features a PCI slot (not PCI Express) you can't add an external video card. The processor as well wasn't intended for this kind of use (512kb L2 cache, 166mhz memory clock).
However there are many other interesting Mini-ITX solutions, many of which suit your needs (powerful and lowcost). Take a look here:
http://www.mini-itx.com/
http://www.mini-box.com/
I think you should go for an AMD board with a GeForce chipset.
For example:
Jetway JNC62K Socket AM2/AM2+ Mini-ITX Motherboard with integrated GeForce 8200
(AM2 Socket, up to Phenom Quad 9100e or AMD X2 5400+, up to 2GB DDR2 800mhz, integrated DX10 GeForce Chipset)
The standard AMD fan for X2 CPU's is very silent as well, so it wouldn't ruin your plans. :)
However there are many other interesting Mini-ITX solutions, many of which suit your needs (powerful and lowcost). Take a look here:
http://www.mini-itx.com/
http://www.mini-box.com/
I think you should go for an AMD board with a GeForce chipset.
For example:
Jetway JNC62K Socket AM2/AM2+ Mini-ITX Motherboard with integrated GeForce 8200
(AM2 Socket, up to Phenom Quad 9100e or AMD X2 5400+, up to 2GB DDR2 800mhz, integrated DX10 GeForce Chipset)
The standard AMD fan for X2 CPU's is very silent as well, so it wouldn't ruin your plans. :)