GPU upgrade will do wonders rather than a CPU upgrade at this time.
Most games are GPU based and throttling on a GPU will result in bad frame rates and poor gameplay. The CPU you have is Average/OK for gaming and would see you out for a few months untill you have the money to upgrade to either a new CPU/Mobo combo or if you go all out for a New CPU/Mobo/Ram combo - Where as the new CPU wont and your pretty much near the top line of CPU's of that era
Your CPU will bottleneck anything stronger than a HD4850. With Bulldozer and Sandy Bridge due out soon, investing too much into a new CPU would be be a waste. If you PLAN on a future rebuild for a new mobo, CPU, and RAM, get a GTX460 now. Yes, it will be bottlenecked for now, but you'll be able to move it into the new build later.
Make sure your PSU can handle it. Considering future upgrades (keeping the single GTX460), you'll want a quality 500W PSU. It should have full range active PFC (no little voltage switch) and be 80+ certified. Antec, Seasonic, Corsair, and Enermax are among the better brands.
Thanks for the advice, so it looks like im getting the GPU. To answer a previous reply, yes it is purely for gaming and is GeForce just because im a fan. The card is a MSI GeForce GTX 460 Cyclone Edition. The CPU will come in about 2-3 months.
I think my 950W power suply should handle it.
Will the bottlenecking cause a lot of problems for the time being, or will it be fine for now?