Aside from the including MAME and games part, this is fine if you don't expect to play 3D games like Tekken or Soul Calibur. (Those would require an Intel Core 2 processor at 3.2 or more GHz).
Contrary to popular belief, 64-bit OSes run OK with 2 GB of RAM, and 3 should give you a decent "shoulder". You only need more than 4 GB for doing development.
Also, ignore the Luddite who says you should use XP. Modern MAME is designed for and runs best on 64-bit Windows 7. Period. You get a free 20% speedup across almost all games for using 64-bit Win7.