Upgrade CPU or GPU?

Go for the GPU, even a low end modern one will be significantly better, and the motherboard likely has a very restricted set of CPUs that it will work with.

And my CPU wont bottleneck the gpu? Im gonna have $210 after buying the psu so i want to buy a fairly nice gpu. But another question i have is if all the other components of my computer will be able to support a larger gpu. So, before i buy anything, should i buy a larger case? And if i should, could you recommend a fairly large one for a decent price?

No idea about those question, which Compaq Presario in particular do you have? There is a wide range. If you are going to have that much after buying the new PSU you might want to look into doing a new build instead of upgrading an older system, it will cost slightly more but it will be more upgradable for the future.

Okay, thanks for the advice anyways, maybe i will just start from scratch. But i'm not sure if ill have enough money to start COMPLETELY from scratch. As for what specific model of compaq, im not quite sure.