As my current CPU is @ 2.40 Ghz, upgrading to 3.40 Ghz and a better video card won't make much of a difference? My other question is what's the difference between an intel i7 @3.4 GHz and an AMD Phenom II @3.4GHz besides a large amount of money?

HelloA large amount of speed and OC headroom

Wow. An OEM BIOS update that adds support for newer microprocessors! They almost never do that.I still wouldn't recommend upgrading the system but if you feel you must, it's not the worst option in the world. Upgrading to Phenom II 965 would provide a huge performance boost, when coupled with the newer graphics card. As was already stated though, you'll still need a new PSU to power everything. The parts mad dog recommend are all fine. You may be able to find a GTX 275 for about the same price as that 260 though, I just bought a BFG GTX 275 OC from Micro Center for $204 on-sale recently.

Wow. An OEM BIOS update that adds support for newer microprocessors! They almost never do that.I still wouldn't recommend upgrading the system but if you feel you must, it's not the worst option in the world. Upgrading to Phenom II 965 would provide a huge performance boost, when coupled with the newer graphics card. As was already stated though, you'll still need a new PSU to power everything. The parts mad dog recommend are all fine. You may be able to find a GTX 275 for about the same price as that 260 though, I just bought a BFG GTX 275 OC from Micro Center for $204 on-sale recently.

Hello MaxWish we had those prices in the Uk you are so lucky over there, a 275 is

Ouch! I really like my BFGs, I have two of those 275s in two different machines in fact. 90-95% of the performance of the OC'd XFX 285 in my sig.