GTA IV & CPU Should I go Quad, should I stay Dual?

Ok, massive processor dilemmas people.
I have currently P5N-T Deluxe, E6320 @ 3.2Ghz with TRUE, 2Gb Dominator 1066, 512mb 8800GT OC x2 in Sli.
I have just bought GTA IV and the next gen game system requirements have just slapped me in the face! I can only run medium textures due to the 'limited' 512mb VRAM but more crucially I am also lagging up in-game. The in-game benchmark says CPU is running 90% and RAM is 95%.... So: another 2Gb RAM is a given, but what to do about the CPU?
It has always been so far that quick dual cores - I.e. E8400 @ 4Ghz will be better, and cheaper, for gaming than a slower quad. Forget multi-tasking for my use - I want to game. But now, I have a game I really want to play that recommends a 2.4Ghz+ quad core - it multithreaded gaming finally here? Would I be an idiot to buy my planned E8400. Other options are Q9550 (the expensive option!) or Q6600/Q6700.
My mobo will support yorkies and is running 465 mhz FSB currently so I should be able to run all of these. Should I save £80-90 and go Q6x00 or just go balls out on a Q9550? Is anyone still saying E8x00?

Try the RAM first - if you still have issues then look into CPU - but I expect the RAM is causing the 'lagging' you describe

I went balls out and bought a Q9550, clocked it to 3.4 got another 2Gb of RAM and it runs sweet now. Just waiting for SLi support - even though the game packaging sports the 'Nvidia way its meant to be played' logo it currently doesn't support SLi!
So it looks like you NEED 4Gb and a quad to get this one to go properly, and for those interested you will need 1Gb+ of Video RAM to put your textures into highest and view distance much over 45/100. 512Mb = Medium. Also don't count SLi/xfire as double, 512Mb x2 still = 512Mb total... *sigh*