it hugely depends on the game.
Some games are CPU hogs, some games are light on CPU but love GPU.
Conventional wisdom is to focus on the GPU because:
1. You get more bang for the buck
2. In benchmarks it shows huge massive FPS increases / allows using massively prettier images.
The problem is that conventional wisdom is wrong. Benchmarks are done with top of the line CPUs which are not holding back the CPU, an old budget CPU can easily hold back your GPU in many games. It doesn't matter that you have 10x the GPU power, you can't bring it to bear.
Worse yet, if a game is a CPU hog it will likely lag with a CPU that is too slow... this is unfixable except via overclocking or ugprading CPU. For example, on mass effect 1 v1 initial release I noticed lag in some areas with my E8400 wolfdale, with OC. I have noticed the CPU was at 100%; I used fraps records to prove the suttering is real.
I ran it on max graphical settings at 1920x1200, as well as min graphic settings at 800x600 window and it showed the same microstutter. The average FPS was triple digits but it will occasionally dip below 20 for a fraction of a second.
Upgrading my CPU to a Q6600 eliminated that (irontically I had gone from a Q6600 TO an E8400 a year prior; it was the right choice at the time, the situation changed over that year; I spent about 5$ on each trade thanks to selling previous one online).
Some time before I had an Athlon64, I went from a 7900GS to an AMD HD4850 to an nVidia GTX260 without seeing any FPS improvement (~45FPS) on one of the source games (forgot what it is called, will look it up and edit it in). Only when I upgraded my CPU did I see improvement.
The problem with a CPU that is too weak is that there is no setting you can lower to improve performance, no matter how much you lower settings the game will lag. With GPU you can just turn down the AA or shadows or something and bam, performance goes up. Of course, a CPU upgrade with an old GPU means you have all that potential but are not seeing any better graphics.
Bottom line is, with the OP system I would do a full system upgrade instead of putting a shiny new GPU into such an old system.