And one more thing. I am little bit confused as to what component i should upgrade first as I am on a limited budget. Should i go for a Core2Duo or a 9800GT. My intention is to play Games. I can only upgrade only one of the 2. Please advise me on this. Thank you.
Upgrading your graphics card will give you a much better boost then upgrading your CPU, not sure how good a pentium D but nonetheless a GPU upgrade is more likely to give you better frames, depends how quickly the pentium D gets bottlenecked
If you play at high resolutions (ie. 1680x1050 or higher) with a lot of eye candy on, you will hit a GPU bottleneck before you even max out the CPU. Also, it doesn't make a lot of sense to upgrade from a dual core to another dual core. Maybe get a Q9550 in the future, if your motherboard supports it.