If you have the money for a total overhaul, then yes, go for it.
However, if you want to squeeze more life out of your current PC, then 1GB and a X1950GT is also a fancy choice. Just make sure if you decide to upgrade your current PC, it will most likely be the last one.
If you plan on overclocking then get the Arctic Cooling Freezer 64 Pro. It's inexpensive (~30) and damn good for the price.
If you have a bit more of a budget, you can spend around and extra 100 or so (including more for the mobo) and get the E4400 which is what I would recommend unless you are on a tight budget. The Arctic Cooling Freezer 7 Pro is for the C2D.
If you want to hold off for one year then the best thing to do is get another gig of RAM.
As far as gaming is concerned, doesn't sound like you need anything really powerful. I was able to play Neverwinter Nights 2 with a 6600GT but I had to put it on the very lowest setting and it was just playable.
If there is a large difference in cost between the GT & Pro, then get the GT. Otherwise, get the Pro version.
This will definitely hold you over for a year. That'll give you time to see how DX10 software & hardware matures.