My lowly ignorant opinion...
UT3 and Crysis will be the only 2 games on the market that will give you a true FEELING that its a performance boost on the FPS side. Even CoD4 will run extremly well on your current system.
Now if your talking about mmorpgs such as EQ2 then its all about the clock and the higher the better. MMORPGs are just naturally cpu hogs and will eat just about as much as you can give it.
If you got 350 and can manage to get ahold of a e8400 and a good gigabyte p35 for around 240usd+80usd, cpu and mobo respectively, then do it. Make sure your current ram will run in the new machine and make sure you got 2 gigs of fast stable ram.
But let me warn you. Maybe soon more games will come out that will test your system, but aside from crysis there really isnt one right now. You should do this if your expectations are not being met.
Let me rephrase..
A E8400 for example is a gaming improvement over your X2 4400+. There is absolutely no way to say otherwise. However only games such as UT3 and Crysis will honestly show a improvement your eye can notice. Going from 100fps max to 200fps is nice on the pride complex, but it is utterly worthless everywhere else. This is because by the time something comes along that drops you under 60fps, technology would have leaped up again and your still behind the frontrunners.
So if you feel you want more horsepower in your rig then go for the overhaul. It IS better. You WILL notice it on games coming out this year. You just need to be really clear of your expectations and genre of games.
This is coming from someone who played CoD4 on a AMD AM2 3800+ 2.4Ghz Single core and a 8800GT for a week to testing it while the my e8400 was flown from california and the gigabyte x38-DS4 was coming from NJ. Also tested EQ2 to a great amount and detail. Both, played really well on the single core and I was getting excellent framerates on both with high settings. No they didnt have AA, and everything wasnt maxed. However they looked beautiful as is.
The e8400 shot both games to fully max and solid framrates. Eq2 went from a 35fps custom Balanced to a 50fps Extreme Quality while fighting in Skyfire. CoD4 went to everything as high as it can go, filtering as much as it would allow me, and 4xaa with higher FPS that held up during the city street fighting.
To be honest however, i only real notice other than smoother lines on CoD4 was EQ2's armor difference on extreme quality, which really isnt different than just High Quality.
Just telling you what I noticed, and I had a much "worse" processor than yourself.
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