I don't see any reason why it wouldn't work, but I don't know if that is the best option in the price range either.
I looked around online and people suggested looking at the motherboard manufacturer's materials to see if its a compatible processor.
That being said, the P67 boards with updated BIOSs can usually take Ivy Bridge chips or at least high end quad core ones like the 2500k.
Unless this is a business oriented PC where absolute perfection is worth a premium over 99.9999999% perfection, then I would stick with either the Sandy Bridge or Ivy Bridge chips instead of the Xeon server processor.
Even if you got the Xeon, it would probably require different RAM if you were upgrading from a more desktop oriented processor like a G860 or i3-2120, because the Xeons like ECC RAM and everything other than Xeons likes non-ECC RAM.
Thanks for the extensive reply. By the way, the i3 2120 is the exact CPU I'm upgrading from.
I don't know a lot about CPUs so I'm glad I asked on here. I've heard a lot of good things about the 2500k so with your reply I'll probably go with it, unless you have a better suggestion for gaming?
I think the 2500k would be better for me, considering its $30 cheaper and that I need to get better aquainted with overclocking. Do you know of any good guides out there that'd help me out (with overclocking)? I'd rather not dive in without knowing what I'm doing.