OC that CPU to 4.0GHz (minimum). I have the E8400 3.0GHz that I'm running at 3.99GHz (pretty tame OC'ing). That probably means you need a new MB too to get all the BIOS options. I have a Gigabyte MB from NewEgg and it has every BIOS option you could ask for.
+1000 for the nVidia GTS250! I have the 1GB version. That card is a beast... I used to play EVE Online at full resolution/settings for hours without a hiccup.
The PSU might need to be upgraded if you get the GTS250. I have a 550W in my case. No problems- that's good!
You should put out the extra cash for a modular supply. It makes life easier.
Of course if you do all this you'll probably need a new case too.
Can you see where this is headed? If you can afford it, take your CPU and RAM and put them into a new system. Definitely look at NewEgg. I got my whole system from them with free shipping incl. the 25" monitor.