Conclusion
We feel that the $200 and $350 upgrade options make the most sense. You could spend $500 to get noticeably more graphics performance, but you'll not get to where a GeForce 8800 GTS could get you with a faster processor. In addition, I don't believe in spending that much money if you don't also replace the platform with something that is up-to-date, which at this point this would likely be a Core 2 Duo system.
Spending as little as $100 on the dual core processor will make the reference system respond noticeably more quickly, and it provides up to twice the calculation power for applications that know how to exploit the potential of two processing cores. Power consumption doesn't change much when stepping from a 130 nm single core to a 90 nm dual core, so you can even keep your existing cooler if you want to. If you intend to keep using your Socket 939 system, now is the time to get a dual core processor for it.
Whether you upgrade the hard drive or decide to spend the money on more RAM really depends on your applications. A 500 GB hard drive is more expensive than two more 512 MB DDR400 DIMMs, but it will last you longer than upgrading into an outdated memory technology. On the other hand, users who like to open all their favorite applications at once will notice a performance boost with 2 GB RAM compared to just 1 GB.