|"what if i did use this s---ty PSU what would happen"|
Worst case scenario - the PSU will become overloaded & blow, taking out the motherboard, CPU & video card along with it.
"And would a really good PSU like 800W increase system performance?"
A higher wattage PSU will NOT make a system run faster. You do NOT need an 800W unit anyway. You can easily get by with a 400-500W unit, but it has to be a good one. That means a reputable brand name (Antec, Cooler Master, Corsair, OCZ, Thermaltake, to name a few). I already mentioned most of this stuff but it should have a single +12v rail of 30A or more. The +3.3v & +5v should be no more than 25A. It should have active PFC (power factor correction), be 80 plus certified & have a decent warranty.
Here's 2 to consider:
Antec 520W PSU
Corsair 430W PSU
The Corsair has 28A on the +12v which is slightly less than I suggested, but it's received a JonnyGuru Recommendation. Who am I to argue with the G man? He is the king of power supply testers! Here's his review of the Corsair: