Most games are GPU limited due to the intense graphics. Counter-Strike Source is one of the few exceptions as it's graphics are old, it's claim to fame was the physics which needs a good CPU.
GeforceGTS, I personally wouldn't stay with AMD if you want more power than an overclocked X2 4000+ can offer. The X2 4000+ hits around 3.0GHz overclocked, and the most you'll get from any other X2 is about 3.4-3.5GHz, a noticeable increase but nothing that is going to wow you. A Phenom would be a noticeable improvement but I dunno if it's really a big enough difference to justify the cost. The increased L2 cache won't make much difference in games either.
Switching to Intel would cost about the same and be a more noticeable difference. You can pick up the Q6600 for $200 at Microcenter and it overclocks to 3.6GHz. Intel is faster clock-for-clock than AMD, so a 3.6GHz Intel is like a 4.5GHz AMD (if they existed). I base that math on the fact that my E2180 at 2.0GHz scores the same as my X2 4200+ did overclocked at 2.6GHz. Most games don't utilize all of the cores on a quadcore, so you might want to consider an E8400 (dual core) which also costs $200 and should overclock to around 4.0GHz. The E8400 would be better for now, but the quadcore gives you more future proofing as newer games are likely to start utilizing quadcore power. You'll obviously need a new motherboard if you go Intel, but a quality Gigabyte DS3L only costs $90 and overclocks well.
You might also consider waiting for Nehalem (Intel's new CPU's) that I think are due out in Q4? I dunno, someone will quickly correct me if I'm wrong on that. But they should be a significant leap from current offerings and utilize DDR3, which should become cheap in about 9-12 months.