The Core 2 Duo is LGA 775. The i7 is LGA 1366, therefore it will not work in the LGA 775 board. LGA 1366 motherboards also use DDR3 DIMMs, so to upgrade the processor to the i7 950, you're not just looking at the cost of the proc, but the mobo and RAM as well.
That said, I wouldn't recommend upgrading at all to a high end system right now. For a working machine, I would recommend building anew when Intel releases the next generation of high-end CPUs (LGA 2011). Based on the upgrades the current Sandy Bridge chips (LGA 1155) have seen over the previous-gen i3 and i5 chips (LGA 1156), there are high expectations for the new chips.
I know next to nothing about dedicated workstations, but you may want to look at the Xeon CPU family as well, if you are to upgrade.