I'd say a faster graphics card would be most helpful right now, along with at least 4GB of RAM, as the GeForce 7025 isn't particularly good for gaming at all, though it is better for newer titles than the X300 simply by virtue of being able to run newer games, just not at particularly good framerates.
If you do want to go up to a midrange card like a 750Ti or R9 270x, a new CPU would be needed, provided you can find a Phenom II. A Phenom II X4 isn't bad for gaming, there probably isn't much benefit to getting an X6 unless your sister plans to play Battlefield 4 or Crysis 3, especially if the X6 is going to be clocked considerably lower than the X4 eg. A Phenom II X4 975 would almost always be a better gaming CPU than a Phenom II X6 1025T. unless you're willing to overclock.