tornadog, your opty rig is great, not as fast as a penryn c2d, but still great. You said 500 bucks - you could get a great mobo + e8400/e3110 + 2gb 1066ram + aftermarket cooler for that amount or less. With regards to vista/xp - I've ran both and prefer xp sp2 because most games will run at greater FPS in xp. vista is nice and userfreindly, and has a lot of neat little extras and new implementations. But on the downside, it is quite slow and annoying. I'm thinking of running a dual boot xp sp3 / vista 32bit sp1. I do prefer xp pro over vista.
If you upgrade, I would get a good p35 mobo. ds3r, blood iron, dq6, p5k, ip35e (louissss's board is pretty nice) . I would get an e8400 or e3110 and 2gb of 1000mhz or 1066mhz ram with good micron d9gmh's, pair that with your 8800gts 320 and a good aftermarket cpu cooler too. for air coolers i would choose one of these:
thermalright ultra 120/ or extreme, zerotherm nirvana 120, xigmatek hdt1283, zalman cpns9700LED, or tuniq tower.