I know EXACTLY that PC. I advise the following :
Grab a good midrange case, grab a dirt-cheap G41 mobo like this one :
http://www.newegg.com/Product/Produc...ab=true&Page=3
And this cooler :
http://www.newegg.com/Product/Produc...82E16835103065
With this ram :
http://www.newegg.com/Product/Produc...82E16820144496
Why that combo?
Well, #1, I've used that mobo with both Q6600 and Q6700 CPUs, and it overclocks well with no heat/stability issues. There were much better S775 mobos out there, but they're no longer available new, and the good ones are still expensive used, and a used S775 mobo that might have seen many years of torture is not a good bet. Particularly affected seemed to be P35 mobos. So, this is only $45 "wasted", and you can get more than easily out of the Q6700+G41 combo later (keep your old CPU cooler to go with it). Also if you check ebay, you can get some decent $$ reselling your HP mobo + DDR2 memory, it will probably cover a lot of this.
That memory is 8GB of nice quality C9 1600 DDR3, so you can re-use it when you can afford a full system rebuild. No sense in buying DDR2 at this point in time.
And of course that CPU Heatsink+Fan combo is fantastic for the cash, and re-usable with all popular sockets out there (just keep the instructions and mounting gear in the box).
With that mobo+ram, just set the fsb at 333 instead of 266 stock, and the 10x q6700 will run at 3.33ghz. You may need a tiny voltage bump to get there, but it may well do it without touching that.
You will get :
Decent CPU performance increase
Double the ram of higher bandwidth, reusable
Faster PCI-Express variant
Nice cool/quiet operation and a great cooler to reuse
Case that will work well with future upgrades
All for cheap. Really the best no-compromises upgrades from a C2Q are the i5/i7 quads, but that's talking a good bit more $$$. The i3, well it's actually pretty good, but I hesitate really to recommend a dual at this juncture, even with pretty effective hyperthreading on the table.