Your E6400 is worth perhaps $90 on e-bay. The 7950GT is worth about $130, and might go down. Added to your budget, you have something to play with.
For most games, the vga card is the critical factor, not the cpu. If you sell the 7950, and add $150 for a 8800GT, you would be able to get a 8800GT.
I think I would wait a bit, until things have calmed down, and there is a reduced premiun on the 8800GT cards.
On the CPU side, you might want to try your hand at some moderate overclocking. You have a better than stock cooler, good memory, and a CPU that would not cost much to replace if you were worried about the warranty. For most games, a Quad is not as good as a higher clock speed.
These changes should be a good boost until about a year from now when nehalem launches.