Well, they both needs upgrade, but if u upgrade cpu first u will need a decent mobo as well. so better upgrading gpu now and save up for an i5 cpu.
but watch out, ur cpu will bottleneck with apprx. every game u play.
as for gpu here is some cards around ur budget:-
1.EVGA 02G-P4-3658-KR GeForce GTX 650 Ti BOOST SuperClocked 2GB 192-bit GDDR5 PCI Express 3.0 SLI Support Video Card
for $169[130 Eur] after rebates
2.HIS H785F1G2M Radeon HD 7850 1GB 256-bit GDDR5 PCI Express 3.0 x16 HDCP Ready CrossFireX Support Video Card
for $169 [130 Eur]
3.MSI N650TI-1GD5/V1 GeForce GTX 650 Ti 1GB 128-bit GDDR5 PCI Express 3.0 HDCP Ready Video Card
for only $129 [99 Eur]
the second one is the fastest one right there.
the 3rd is like 1st but with 1GB memory instead of 2GB and a bit lower core-clock and 128-Bit memory bus instead of 192-bit.
but the 3rd one is the cheapest one, however i'd recommend the radeon 7850 but it depends on ur favorite.