For Question 1: Depends on your video card. If it's one of the listed below (5770 or 5850) then no. Extreme games such as Crysis are pretty ridiculous at very high settings and bring even the most high end video cards to a sweat. However, for about 90% of the games out there, with your setup at 1600x900, you should be OK.
For Question 2: You might notice a 3-7% increase in performance depending on the game (being safe here, it might be more, might be less or 0%)
For Question 3: Personally I think the 2nd setup would net you more performance (the 5850) although it is more expensive. Also, you should still be able to overclock your processor with a better video card (unless your PSU would be holding you back, in which case I'd definitely understand your hesitation)