depending on the games you play the dual core may be faster. As far a long term upgrade, the quad core is likely a better choice. The 8xxx quad core series is poopy though, the chips suck at overclocking. The 9xxx series quads are much better.
You are actually much much much better served getting a new chip and motherboard. I can't recommend people go and buy a chip that is 2 gens old already for a system, but in your case you are likely upgrading a 2-3 year old machine for the last time. To save money, that approach is OK. Just understand that you will want to upgrade again in a year.
L2 Cache is not that important to performance, except in some cases. In games two equal chips that have different cache may only be 5-10% different at most with the cache on/off. I think AMD chips avoid L2 cache for the most part, it doesn't hurt their performance.
actually he is only partially right. The quad core would be better for newer and more demanding games, like starcraft II. Toms actually has an article on how many cores you need for gaming, I can't find it or I would link it. But it is here. It said that mostly a 3 core chip is all that is typically used, but quad core got better results on games that are optimized for more cores.
Overall, the two chips will give near the same performance on most games, unless the game is optimized. Then the quad core will do better. Also, when you are not gaming, the quad core is better for multitasking. Just my opinion.