Keep in mind that I'm on a budget and can't afford much better components than this.
I'd like your advice on any better configurations or components and should I just upgrade my current system or built a new one?
If you're going to build a new system, don't build it around the dead LGA 775 socket. An AMD AM3 build would offer much better performance and a better upgrade path. Of course you haven't really given us enough information to give you a good recommendation. What do you use the system for? If you play games, what resolution does your monitor run at and what games do you play? Where will you be purchasing your components?
Sorry, but I'm new. I'd use my system mostly for browsing web, multitasking and gaming now and then. Resolution on my current monitor is 1280x1024 but I might be upgrading it to 1920x1200 or dual display with 1280x1024 resolution. Since I live in Bosnia witch I think is a country you probably don't know I'd be buying my components from: http://www.mp.imtec.ba/WelcomeMal.aspx witch might be useful or not.