Personally, I think you're crazy for trying to use Vista on that thing.
Really, switching to XP would be a wise decision.
When it comes to upgrading, it is far easier to go about updating graphics, but because your processor is so bad I would almost be willing to say that you need to buy an entire new mainboard.
Just make sure you stay the heck away from local stores and buy everything from trustworthy online shops. (Newegg, Tigerdirect, etc.)
If I were you, I would spend the extra money and just get a new PC; though it might be easier to rip everything out of your current case and refill it with better parts.
Just make sure you have plenty of room and what not.
XP also has less security features than Vista/7 (specifically UAC, which finally implements the same sort of user rights and SUDO stuff linux and OSX have had).
While many games may appear to double the memory requirement for games, they're just raising it to a new minimum. While you may see "512MB, 1GB for Vista/7", you sure as hell don't see "2GB, 4GB for Vista/7" in anything official.
No reason to go with XP, downgrading an OS like that is a lot of work.
because everyone needs a i5 and a 5770 right? whats been suggested so far is going to be a definite improvement over what he has now, and it will be able to play new games fine at lower resolutions.
i've got a slightly worse set up (amd 64 x2 5000+, 4670) running new games without a hitch, Bioshock 2, ME2, BC2 maxed @ 1280x1024. STALKER CoP on medium, the only game i've had trouble with that came out recently is avp, but avp is a buggy game all around.