I cannot upgrade my ram due to my motherboard (seems slightly faulty), for the same reason I would rather not attempt to overclock my CPU as it may destroy my crappy motherboard.
Would be nice if I didn't need a new power supply as well, but that may be pushing it.
I've been pressed by my brother (who also uses my computer, and really should be contributing money to it!) to get a new system, but I'm not sure if I really need to. (I think he has ulterior motives).
I use it more heavily and play games like WoW, CoDMW2, Bioshock 2, Mass Effect 2 and soon Starcraft 2.
The PSU is the best thing in there. It wouldn't need to be replaced. If OCing or more ram isn't an option then I don't think the HD5870 makes much sense. Or even the HD5850. An HD5770 is about 25% more powerful than your HD4850 and will give you DX11 however so it is something to consider. Or perhaps wait for the HD5830 to be released.
The CPU bottle next only comes into play on certain games, and at extreme resolutions anyhow. So if you want to I'd say go for it.
The varying by game part is right but the opposite is true regarding resolution. Games tend to be much more CPU limited at lower resolutions.
As for your advice, yeah, if a full upgrade is eminent then sure but only in that case. There is always a steep premium for high end tech and it almost never makes sense to pay for it when it is useless for your current setup. Getting something appropriate for your current needs that isn't overpriced is rarely something you will regret. Spending $400 for a video card that you don't need now and will be $200 when you do? Big mistake.
I wouldn't recommend an HD5870 in any case. An OCed 5850 or an HD5770 now and crossfiring when he upgrades his machine will give similar performance at a significantly better price.
If you are going to upgrade to an i7 or i5 I see little point in getting a higher end 5870 when you could just get another 5770 when the time is right.
If you where getting a better core2duo or quad then maybe the 5870 would be a good choice as you will mostlikely only have one pcie slot. Because crossfire pre X58/X48/X38/chipsets are kind of bad. Also the lag time to when you upgrade your CPU with your new 5800 card is important, if its not soon after getting the new card then stick with the lower end and crossfireing, much cheaper and a better value.