Is it better to upgrade the cpu or vid card?

It is not worth upgrading from an E8400 to an E8500. You will hardly see any performance improvement for every day tasks. If you do something intensive like video encoding then you will see a minor improvement, but not enough to justify replacing the E8400.

Outside of gaming a GPU upgrade will not improve performance general daily tasks. A good video card with HD decoding can reduce the load on a CPU when decoding Blu-Ray or HD DVD, thus reducing the chance of dropped frames. Other than that, nothing.

If you aren't gaming, probably no sense in upgrading your card. Fact is, for mainly 2D purposes, an integrated graphics processor is probably good enough. It wouldn't make sense to upgrade your CPU either. An E8400 is really overkill for such use for that matter, much less an E8500.

Both options described are not at all worth it.

E8400 to E8500 - You and almost every other person out there would not see any performance improvement. Completely worthless in my opinion.

2400 XT to ???? - If you ever decide to game, upgrading your video card would be a great option. However, considering that you seem to use your computer for less intensive tasks like surfing the internet, a new graphics card would not be worth it.

video card your e8400 is more than enough

Your money would be better spent on other things. For example upgrading:
Speakers
Sound card (a good one, none of that crap from creative)
Monitor
Keyboard
Mouse

Things like that truly enhance the user experience.

^I COMPLETELY agree.
Skittle really hit the nail on the head.
Spend the money on somthing better like a mouse/keyboard or screen or a card reader or a mic or take your family out to eat at a nice restaurant  

is your computer slow may be its malware try spybot and avast free

thanks everyone, that's good to know, I'm now wondering whether I need an E8400 (I'm buying from Dell cause it's easier and they charge about $100 more even for the E8400 over the E8300) and again about $100 from the 2600 XT over the 2400XT, maybe I'll just go for the cheaper 2400 and E8300 and get an extra monitor or seomthing like that, any more thoughts welcome!

Build your own, and stay away from Dell   They cheap out on PSUs and Motherboards, not to mention locking the Motherboard BIOS so you can't get any extra performance out of your gear.

For regular web-browsing and 2D stuff the E8300 will be just fine.