Should I get Q9450 and some nice DDR2 ram in 2-3 months or should i wait for the 32nm generation to come out next year? Is there really going to be that big of a performance difference? I am currently running E2160 at 3.25 GHZ, 4 GB DDR2 800, and a x1800 xl 256mb GDDR3 and i am starting to get lag on my 22" monitor when i am gaming at low to mid graphics settings. Hoping to get an awesome new rig that will last me 3-5 years before i start experiencing lag again at low to mid settings. Really need some advice on to wait for not.

I would wait and save some extra dough for your next rig. Your 2160 should be adequate. If anything, get an 8800gt. They're going for less than $200 at many places. Check slickdeals or fatwallet.

I agree, it's your GPU holding you back and not your mobo or CPU

that cpu is fine, i have it @3.0 ghz and it doesn't bottleneck a 2900xt at all with most everything on max

The reason I would wait is upgradability.
 
The 32nm CPUs will use a completely new socket which will also require DDR3 memory.
 
So its like this.  You have a 65nm CPU on I'm guessing a P35 board with DDR2-800 memory.  If you wanted to upgrade to the new 45nm CPUs, all you would have to do is buy the CPU and toss it in.  Maybe have to flash the bios to the newest version.  Not bad.  But may be a waste because I'm guessing you CPU won't be a bottleneck until Nehalem does come out.
 
If you were to upgrade to Nehalem 32nm CPUs you would have to buy a new motherboard to support the new socket/FSB.  You would also have to buy new DDR3 memory and finally you would have to buy the CPU.  Pretty much you'd be building a new computer.  But there will be many many newer parts coming out to constantly upgrade to.
 
I'm sticking with my 65nm CPU and might not even bulid again when Nehalem comes out.  I suggest you stick it out with you CPU as it is a good one and probably is not a bottleneck for many games.  The above posters are correct, just upgrade your card to the 8800GT or 3870 as they're both dropping in price.  Hell even the 8800GTS G92 is down around $250 sometimes.  That will keep you going to Nehalem.

 
Nope. Only the first release(45nm) of Nehalem will start with a new socket. The 32nm shrink, aka Westmere, should be like Penryn and use the same socket, just needing a BIOS update.
 
For the OP, you are fine for now. I say save up money for the next year and a half and get Nehalem. By that time DDR3 will be more of a standard with better latencies, speeds and a much nicer non death inducing price on your wallet.

I shouldn't worry about your CPU or RAM and think about spending a decent amount on a graphics card.

So i should save up money until 32 nm nehalem comes out? but when is that? 2010? Or should i just save for a year when all the 45 nm Nehalem have dropped and stablized in price then buy it with about 4 GB of DDR3 ram? Need to know when to buy since i would have to revise my financial planning for the next year or so. I was planning to drop about 1.5k on my new rig but if i am getting it next year i might only drop about 1k-1.2k since i wanna save and get a decent laptop after my next high end rig.

Your computer is fine.  Your Graphics card is not fine any more.  So the plan for world domination at this point is:
 
(1) Buy an 8800GT now, install it, then go for and blow things up.
 
(2) Save for a new build on Nehalam in 1H 2010

The latest i will get a new rig is Q1 or maybe Q2 of 2009, anywhere near Q4 of 2009 and Q1 of 2010, i will have enough money to get a crazy ass laptop for univeristy.

The value of a quad is for heavy multitasking, not gaming.  The exception is if your game is FSX.  Nehalem will be a 45nm part, but need a new mobo, and likely ddr3.  the 32nm variant won't be out until a year later.  To see if a cpu upgrade might help, turn on the performance monitor while you are playing a game.   If the cpu is <65% busy, a faster cpu won't help much.  If it is >85%, then a cpu upgrade is in order.  Also look to see of both cores have high utilization.    
 
I'm betting that a vga upgrade will do you more good than a cpu upgrade for gaming.  
 

Get an 8800GT and install it in your system.  The lag will probably all go away, and you will have spent maybe $200.
If the lag DOESN'T all go away, post your specs so we can see if something else might be going on.  You will not have wasted your money, because if you get a new rig, you'll still put the 8800GT in it.
 
Edit: Oh, before you do that, make sure your PSU is up to the job.  If it isn't, that's another thing you can upgrade knowing you can use it in a new rig later.  If you need one, choose it from Tier-3 or better from the list at http://www.tomswiki.com/page/Tiere [...] gs?t=anon.  500W should be enough, unless you plan to use SLI, water cooling, or a lot more "stuff" that you haven't described.

I was thinking of getting an 8800 GT and then next year, build a whole new rig when Nehalem has a nice $300 Quad along with good performance 4GB DDR3 for about $100-160. Right now I am using a  Antec True Power II 550w, that should be enough to power a 8800 GT OC and my other overclocked components.