If you mean the i7 chip and DDR3, I'd save the money and get that setup. I wouldn't bother upgrading your present mobo and CPU with another 775 socket CPU unless you found a really good deal.
I have a 4870/512 with a QX9650 and I think it does a great job. But I don't think that either it or a GTX 260 would be worthwhile in your case. The slight gain in performance over your 8800 GT/512 probably wouldn't be worth the money spent.
Just my 2 cents worth.