I'd say keep current cpu, add some memory and a a new graphics card, maybe the 8800gt, though the 9600gt and 8800 gs look good if you are on a budget. If your gaming and things of that nature, I think you'd see more benefit with a graphics card. Then you may be able to carry your newer memory and graphics card over to a new board/chip later on.
I don't know if the 2160 would be a bottleneck or not quite honestly, I'm running AMD myself, always used their stuff. But that seems like it should be fast enough. My 5200x2 runs at 2.6 ghz stock and is plenty for most things. I also am unsure as to how much 2 more gb of memory would help encoding and what not, but certainly shouldn't hurt. The more the merrier on memory, especially as cheap as it's been, then you'd have it if you do that CPU upgrade later. If you have a 64 bit OS you would be fine, but if you have a 32 bit OS your machine may not be able to use all of the memory as it wouldn't know how to assign it all.
But if your gaming, a new video card might make it feel like a whole other animal for that purpose then live with what you have until prices drop.
Just put the new card in, they use the same drivers. Consider adding 2gb, It is cheap, and there is no substitute if you can use it.
You will NEED to unistall those drivers and get some new ones, or you will get a decrease in performance, bugs, and most likey crashes, could damage some components too. You must use a program to wipe away anything left form the previous drivers, reinstalling Winows would not be a bad idea.
@The-blood-raven: The driver download for the 7000 and 8000 series cards are the same; why would you need to re-install? If the op does not have the latest nvidia drivers, then it wouuld be a good time to update it.