New cpu or overclocking ?

Try overclocking in small steps until you get instability - then back off slightly. If you are happy with the results - stay with your current CPU - if not buy a new one. 3700's are no longer manufactured and supplies are getting smaller. I recently assembled a Sempron 3400 - Palermo core. Was very impressed - it has a low thermal rating ~ 25% less than 130 nm cores and runs cool, only tried 10% overclock but was rock steady and temps were only 45 c with stock cooler. Also much cheaper than 3700.

I really don't know if it's worth waiting for the m2, prices for the cpu and mobo will problably be high and I'm on a tight budget. Even though it has'nt been officially announced, the AsRock 939Dual has a special slot to wich you can put a daughter card to accept the new m2 cpu and ddr2 ram.

That's what AsRock did with one of their s754 mobo, a daughter card to accept a s939 cpu and double-channel ram. The upgrade path is really interesting but we'll have to wait and see if the m2 upgradability will be for real.

But I'm getting off-topic myself here, I'm still thinking on what to do exactly.