The problem with video conversion/encoding quality is not the hardware used, but the software!
You need to get better software! You already have decent hardware, an i5 already speeds up encoding, though you will get better encoding performance with a decent nvidia or amd gfx card and an i7 cpu, you will not necessarily get better quality, that depends on your software used and the codec format; H.264, mpeg etc...
Hope this helps you decide.. remember that we are daily improving on technology and the speeds at which things are done! You can build a super mean system for encoding etc, but it will only be as fast as the software giving instructions and making of use of hardware provided... at the end it all depends on the software... if you take a look at gaming, some games run with excellent visuals with low hardware requirements, where others run also with excellent visuals but eats at low end hardware and systems. Its al the software..
Take a look at AVS video converter software and some free others at this link:http://www.afterdawn.com/news/article.cfm/2009/12/04/video_encoding_for_free_5_programs_compared