looking for "professional" opinions-help

Hello. I'm thinking about upgrading my gaming computer and would like some opinions on whether i should or shouldn't. First, my current specs- P4HT, 2.6ghz, 478 socket, Asus P4C 800e-Deluxe mainboard, 2gb Ram, ATI 9600XT(AGP). I would like to upgrade to a P4 3.0-3.2ghz, 478 socket and either a Nividea or Ati Highend AGP Graphic card. I know the 478 socket and the AGP graphic interface is old, but i cannot afford a totally new computer. Plus the motherboard kicks butt, so my question is-will i notice a NOTICABLE improvement with a "newer" cpu? and, which graphic card delivers the most bang for the buck? I know the 7800gs is the biggest card at the moment, but i have heard that the ATI X1600XT and X850GTO is also good and costs have as much. Please, help me out with this. Thanks!!!

I don't know much about graphics card, but your current computer specs are pretty decent for gaming i'd say, why do you still need to upgrade? having lag problems?