Generally speaking, once you've hit a reasonably powerful level of processor (Athlon 64 3400+, Intel Conroe, or better) and a decent amount of ram (2GB of value-whatever RAM), you're better off spending your money on as powerful of a video card as you can afford, instead of upgrading your CPU or RAM.
That said, not enough/slow RAM or an old processor will seriously choke your system's performance. If you've got an Athlon XP and 1GB of DDR400, you're not going to see much difference with a brand new, $700 video card.