Should I Upgrade to Q9550 from my E8500 - Tri - SLI Rig?

That depends on whether you believe that more cores make up for less speed.

I've read that dual cores are not good at processing Tri-Sli and a quad would show much improvement. Should I upgrade to the Q9550?

I've never (can't) run mine in my Sli rig, but then I don't run three cards either. However I think it would be more of an i7's scaling ability rather than the Wolfdale's that you may have been reading about, I could be wrong though.

depends... i would love to run a heavily overclocked wolfdale with tri sli. you should try it and post some benchmarks!

The thing is, I am actually losing FPS in games from SLI to Tri-SLI with my rig. I think the E8500 is bottlenecking the Tri-sli

very well could be the case. other than that some games just scale horribly when you SLI or crossfire. im assuming you are playing demanding games that can actually handle it though...

anyone else think the Q9550 will prove to be better for tri sli?

I think it will perform better, after all, you will be adding two more cores, even if the clockspeeds aren't as high. I am assuming you overclock your chips as well....

3 way 260's is a very powerful setup, and while i have not doubt that a quad core socket 775 will improve over the e8500, an i7 would be needed to unleash its full potential.