I use Windows XP on an AMD Dual Core with a GeForce 7900gs, 1gig of ram.
I've installed XP on systems with a Pentium 2 and it runs better then Windows 98 ever did. I recommend Windows XP for anyone who wants a great stable operating system. I don't recommend Windows Vista though until Microsoft gets a service pack out though. The performance on games compared to that of the Windows XP is just horrible.
It's nice to see a fair few people are using dual cores then, i guess the few who can't run it smoothly will just have to lower the settings. I recently ran it on a 2ghz machine and it ran at its full 30fps, which is weird cos other slower processors struggled, still it's a good sign!
Just put together a pretty cheap PC recently. Processor is just a Intel Core2 1,8 GHz, but it handles most games well.
I'd say the average computer user wouldn't have below Pentium 4. Seeing as anyone can put together a computer pretty easily and with low costs if you know what and where to buy.