I'll second 1 or 3 too. You could look around here or some other classifieds and try to find a good deal on a G0 Q6600 for a quad. Some of the newest games actually can use 4 cores, and that's where duals start to fall behind a little.
You now have a very good and balanced system. You may have to do a complete rebuild to improve significantly.
If you are gaming at 1920 x 1080 or larger, then a graphics upgrade might be in order. But... you might not notice the benefits of a two tier jump to a 5850.
If your games are capable of using more than 2 cores, then upgrading to a quad might be good, but there are only a handful of games that could benefit.
To assess the possibilities, try a couple of tests:
1) Run your games, but reduce the resolution and eye candy to a minimum. This will simulate what will happen if you upgrade to a stronger graphics card. If your FPS improves, it indicates that your cpu is capable of driving a stronger graphics card to higher levels of FPS.
2) Keeping your graphics resolution and settings the same, reduce your cpu power. Do this by removing the overclock, or by using windows power management to set a maximum cpu% of perhaps 70%. If your FPS drops significantly, it indicates that your current cpu is a limiting factor, and that a faster cpu would help. 3.6 is already a good overclock. A i5 or i7 cpu will be perhaps 15% faster, clock for clock. You would have to do some work to get one safely to 4.0.
If you stay with the core 2 line, and go to a quad, the clock rate will be lower, so if you go that route, make certain that you need more cores, versus a higher clock rate or you will be disappointed. I would not go that route and invest in an older generation quad and mobo today.
I have to say that getting a steal on a G0 Q6600 has really helped my PC in quite a few ways.
It's clocked at 3.4, just a tad higher than my E6600 was, and I saw gains across the board. I'm telling from my personal (2010) experience, new games like to have more than two threads.
The G0's are out there, and can be had for a pretty good deal if you look around a bit. I wouldn't really advise purchasing a dead socket CPU usually, but for the right price, it's a decent upgrade for your dollar.
Thank you all for your thoughts. I have a 1680x1050 screen atm but a full 1080p screen may be in the near future. I will play around with setting like you said geofelt and try and find what is currently the most limiting factor. I'm almost certain ( at least for the majority of games that I play ) that my gfx is the limiting factor. And if necessary I can push my CPU up to almost 4ghz if I need to to limit bottle necking. Again thank you for you insight.
I will be looking at a 5850 or gtx470 depending on price/performance ( unless something else comes out in the next month or so ). But it might be up to a month or two before I get a new card ( pesky things like rent, power bill, and food keep sucking down computer funds ) plus it is likely that 5850 prices will drop as the gtx470 comes more available.