It is a very smart decision. It will increase gaming performance a lot. It would not be smart to upgrade CPU, because it's quite decent. I take his CPU is already overclocked?
I would advice against going for 16 GB RAM - it's quite overkill, personally I haven't seen my RAM usage climb over 5.5 GB (when having 3 games open at the same time, Battlefield 3 was one of them). Though upgrading to 8 GB seems wise.