1) Your 9800GT is a pretty decent card. If it is failing, I think XFX has a lifetime warranty which you should pursue regardless.
2) If, you also want to improve your fps, then make your upgrade a significant one, or you may be disappointed. The 5770/6770 is about the minimum. The GTX550ti will be about the same price and performance.
3) Modern Nvidia cards use the same unified drivers. If your 9800GT driver is current, you should be able to just drop in a new nvidia card.
4) Unless you exclusively play just one game don't anguish over different cards in the same price group. By and large, they will perform about the same; or at least enough the same that you can't tell the difference without a benchmark. The market is very competitive.
5) I suggest you upgrade to a better nvidia card simply for the convenience of not having to clean out drivers.
Get your 9800GT repaired under warranty, and sell it on Ebay. You should get $40-$50 for it.
Use the funds to justify a bigger upgrade.