What would you do? (upgrade)

Neither. I wouldn't try upgrading the LGA775 machine, and I wouldn't sink any more money into the two generation old AMD machine. I would save up money to replace the main build once Sandy Bridge is re-released, then move the 4850 into the old machine and use it as an HTPC.

Basically, the new build would look something like this, with estimated prices:

CPU: i5-2500K $225
Mobo: ASRock P67 Extreme4 $150ish
RAM: 2x2 GB of DDR3 1600 mhz CAS Latency 9. Currently $25 after rebate at the cheapest Those are sold out, but at most likely around $40. Or you could spring for 2x4 GB for around $100.
GPU: Your 560. Plan to add a second later on.
HDD: Samsung Spinpoint F3 1 TB $65
PSU: 750W from Corsair, Antec, Silverstone, SeaSonic or XFX $100ish
Case: Rosewill Challenger $55 (or whatever you like)
Optical: Cheapest SATA DVD burner you can find <$20

Total: $655. Add $100ish for Windows 7 64-bit OEM if you need an OS.

The P67 boards likely won't be re-released for another month, so you have some time to start saving up for the new build. I certainly wouldn't throw any mroe money at the obstolete builds, so I'd either make due with what you have now until you're ready for a replacement or pony up the extra cash for a new build earlier than expected.

Thanks for your comment.

Do you think my 610W can handle SLIs? I have PC Power & Cooling one which I got with the LGA775 board. (My HTPC rig has OCZ fatality 550W so it should handle q6600 & 4850)

I've got plenty of drivers so all I need is a CPU, Mobo, Ram :S

610W isn't enough for SLI with the 560. I'd want at least a 650W for the GTX 460 and anything less (current generation only), a 750W for the GTX 570 or lower and 850W for anything above that.