For $250, I would get a dual core CPU. Mind you I was recommending the X2 3800+ and not the (single core) 3800+.
Actually, when looking at prices and availability, I would suggest the following:
1) get an Opteron 165
for $155.99. If you get a good stepping, 3.0GHz is possible, and even with 'bad' steppings, you can hit 2.7GHz usually. Dual core CPU, 2x1MB cache... good performer.
2) put the rest of the $250 aside for a new motherboard, which you will get when you upgrade that video card. You're currently running AGP, which is outdated. This DFI LANPARTY UT nF4 Ultra-D Socket 939
for $104.99 is a good one to save for.
3) Upgrade the video card and the motherboard when you have enough money. Around $100 for the mobo (see under 2), and about $150-$200 for a nice video card. For around $200 you should be able to get an ATI Radeon X1950PRO, and for around $120 you can already get an 7600GT. Either card is a major upgrade from what you have now.
4) what RAM do you have now?