what should I upgrade to... opty, or c2d, or phenom?

no one can comment about how phenom performs -- its not yet tested!

8800gt seems to be a great card (on paper and some tests conducted -someone posted the link of the site) wait for it.the 8800gt outperforms the 8800gts--320/640
if u can wait for ati's upcoming range -- you could make a better choice when the cards from both nvidia and ati have been compared using UT3 as the benchmark.for now the beta version of ut3 should run albeit at low settings on ur config.i know coz it runs smoothly on mine.chk my signature for my config we have the same video card.

q6600 and 8800gtx 640mb ddr2 4-4-3-8 - raid

I would agree with DragonSprayer, to go with Q6600. Even better, you can go with Penryn Q9300, which is 45nm, with 6Mb cache. It should run cooler, consume less power, and overclock higher (if you're interested). It should be released around November, with a price tag of 266USD, same with the current Q6600.

For motherboard, I would recommend you getting a P35 board, or X38/X48 board if you want to go more high end. A P35 board sells for 100~150USD, so should be fairly cheap.

RAM, you can get 2Gb DDR2 800 for about 60~80 bucks.

For GPU, I strongly recommend you either an ATi 3800, which is due out later this month, or 8800GTS 640, as they'll be cheaper.

For PSU, I also strongly recommend Seasonic PSU. They're a little more expensive, but very stable and quiet.

Good luck with your build.

I agree. Get the new quads from intel, Penryn I think, they are coming out first month 2008.

Better performance per $$ there, especially with the 8800 gts 640.

Don't settle, get something you can keep for a couple of years.

I agree with the Seasonic PSU advice. They are great.

Wait until just before Christmas before you start to look for stuff. A few months is a long time in the technology world and a lot can change.

Phenom

If you are gonna spend some money, get nothing less then a quad.

I'd wait till January, there's going to be a ridiculous number of new CPU's, mobo chipsets and graphics cards being released from November till January and nobody knows exactly how each will perform and be priced.

If you hang in there for 3 months you may be able to pick up a machine that will perform way better than anything available now for a much lower price.

Anybody who says "omg Penryn will blow Phenom out the water, and wait for the 8800XYZ it's going to ownzor!" has nothing concrete to base their opinion on. Yes it's fun to speculate but when you're actually building a system you want concrete, provable performance not a bunch of maybes.

But as for specks I'd go for which ever Quad is giving the best bang for buck in January and probably one of the new AMD/ATI or nVidia cards that are going to be released soon, both the 8800GT and HD3800 look like they'll be good solid performers at decent prices and the new AMD/ATI card based on the R680 chip may well be a GTX killer. Or not, I'll believe that when i see it. Again it all comes down to what you can afford at the time and when you want to have your system built. You may well be able to get away with putting a decent opty and a 8800GTS in your current rig and not notice to much of a difference in frame rates and playability on current games but more and more games from now on will make use of quads.

And don't forget that most new gaming rigs will need a lot of juice so factor in the price of a decent PSU when you're costing out your new build.