The i5 750 has lots of headroom for a GPU upgrade over your current card. It won't hold back anything except perhaps the top video cards out right now, the ones sold for around $500 like the GTX 680 or Radeon HD 7970.
Your motherboard is new enough that it will support any new video card out there. The only thing you have to worry about is if your power supply is up to the task of powering a higher end card. The 4650 is a lower powered card. Any really significant upgrade is going to use considerably more power.
Definitely the GPU. Most new games coming out are way more dependent on the GPU than the CPU in the graphics department. The most significant improvement I've ever witnessed was when I upgraded my video card.