The CPU is definitely going to limit the GPU, but it'll still be better than what you have now. I recommend getting just a new graphics card and power supply for now (don't know what is your current power supply, but seeing as your PC is rather old, most likely it's not good enough for something like the GTX 560 series), and later on get a processor, motherboard and memory all together (AM2 motherboards used DDR2 memory, current motherboards use DDR3 memory, unless you want to play games like Battlefield 3 with the Athlon 64 X2, 2GB should be enough, there's really no point in getting more memory).
Most likely by the time you can upgrade the CPU, motherboard and memory, there's going to be the new Ivy Bridge processors, you could then upgrade to one of those.