I have an e7200 with an 8800GT and will be upgrading to 5870 as well. 97% faster at my res of 1680x1050.. if you overclock the 7400 like I did to my 7200 I am sure it will be fine. get a good cooler like the hyper 212 or somethign along those lines.. you should be able to hit 3.4Ghz if not higher.. my 7200 nailed 4.13Ghz.. but my everyday clock is 3.8 with a over specced FSB Games tend to favor clock speed over cores.. you will see a dif with a quad, but I would oc the 7400 and save for a nice i5 - i7
If you really want to upgrade get a faster quad in the 9xxx series, but like they said your cpu has some serious OC room so start with that. Remember a very small percentage of games see increase from quad core setups.
DOverclock to 3.6 and beyond up to 4.0. 3.6 would be golden for you though. Once you aren't satisfied with your rates and you see better performance on benches with quads on your gpu, upgrade. The 7400 also has 50% more cache per core and a higher stock clock, meaning games that are not optimized well for quad will actually show a decrease in performance, this is one reason why I recommend the Q9xxx series. Core2duo is a very underrated gaming cpu, they can do quite a bit.