I wouldn’t go with an AMD chip at the moment, not even the [new] Phenom’s for various reasons like performance (For example), lack of supporting DDR3, etc.. but it seems like you’re not going to upgrade your system as a ‘whole’ right now anyway.
Personally, I wouldn’t buy a new CPU for your current motherboard, any more RAM (If it is possible), etc—it’s kind of a dead end. I’d just get a new CPU/Motherboard/GPU/RAM/Case and you could do all that for roughly ~ $400 and you’d have quite a good PC on your hands (A 9600GT which supports 2560×1600, dual core CPU, 2GB DDR2 800 RAM, etc). Also, that’d be using your current HDDs, monitor, DVD drive, etc.
Here is a guide from Ars Technica on a ‘Budget Box’ but you can find even better prices on some parts (Like RAM) and you do not have to upgrade everything (Like I mentioned).
I wish AMD would create an awesome line of CPUs, like their Athlons a few years back, and bring back some heavy competition to Intel.