Upgrade or build anew?

Well you've stated what you're interested in doing. My question to you is what's your budget? That will be the deciding factor on what you do next. It looks like you're willing to spend a bit; which would give you a lot more options. But if you're looking for a more budget based "upgrade" I'll give you a bit of information there...

As a final upgrade for my own older AMD based system I recently purchased an Opteron 180 new in box (replaced a 3200+). I'm pretty sure your current motherboard could handle that processor as well. The 180 would perform around the lower end of the mid range of the Core2 lineup; and would only run you about $160. It's also possible you could get a 4800+ or Opteron 170, 175, or 180 for cheaper than that on eBay (if it appears the seller is reputable).

The power supply you selected isn't bad. Ultra definitely honors their warranties too. My problem is I've had to use those warranties on numerous occasions w/ their PSUs. You can probably snag a Coolermaster 550 cheaper that could get the job done.

Video cards I honestly don't know much about right now. But brand wise I favor EVGA because of their lifetime warranties. Also, if you're doing a budget upgrade you should likely be able to find a high quality 512mb PCI Express x16 card for around $250, if not less.

You'd also want to grab another 2x512 DDR400 sticks for this rig if you upgraded it. Giving you 2GB total.

All that may total as much as $500. That'd only be $100 or $200 less than the entirely new build you outlined. So it really is debatable whether it's worth upgrading a system to it's maximum or starting anew with the midrange of newer technologies.

Honestly, after I got through all of this it may be worth just doing the rebuild. However, if price is a concern then you can justify the final upgrade by saving yourself the cost of a new motherboard. And if you still want the parts 18 or 24 months down the line, the power supply and video card will still be what you would've had anyway...

As for the bit about January prices. Not definitely. Obviously technology always falls over time. But it falls more with the release of newer/better lines.

Over all looks good. Would suggest a P35 mobo, either Gigabyte P35 DS3L or ASUS P35K or P5K E depending on your budget and features you need. If you're not overclocking, the stock HSF will be fine