You're essentially in the same situation as I am. My rig is 2.5 years old, with a Intel Pentium 4, 3.2 GHz HT, 1 GB RAM but with only a 80 GB Hard Drive and an ancient ATI Radeon x300 SE...

I myself am going to hold off buying a new beast for 1.5-2 years until Dual Core and Longhorn and hopefully 64 bit become more mainstream. For the upcoming Neverwinter Nights 2 and of course M:TW II, I'm gonna snag a Nvidia 7800 GT.

You should keep your processor as is, my guess is that the extra RAM and New GFX card will do much more than a itty bitty hike in processor power for your gaming needs.