I would invest in a new processor, personally(the i7 950). Also look into getting a new PSU (maybe closer to 1000W if you haven't already).
I don't see how he needs anything close to a 1000 wat P.S. for his system. That is a waste of $$. My system runs fine on a quality 650 watt P.S.
I agree with the GPU upgrade. That will cost you half of your allotted budget, but considering your system would require a new mobo if you wanted to upgrade memory or CPU I don't see that as a viable option to increase gaming perf.