First post so a big /wave to the community here 
Right so I've had a PC which over time has needed some love, with an up coming game release (Tera Online) I'm looking ahead and wanting to recycle as much as I could - but of course some major parts will need upgrading.
My current system is -
Asus M2N-SLi Deluxe (Socket AM2) PCI-Express DDR2 Motherboard
AMD Athlon 64 X2 Dual Core 5000+ 2.60GHz (Socket AM2)
Sapphire ATI Radeon X1950 XT 256MB GDDR3 HDTV/Dual DVI (PCI-Express)
GeIL 2GB (2x1GB) PC6400C4 800MHz Ultra Low Latency DDR2 Dual Channel Kit
Western Digital Raptor 36GB WD360ADFD 10,000RPM SATA 16MB Cache (main drive)
Seagate Barracuda 7200.10 320GB ST3320620AS SATA-II 16MB Cache (Second drive)
Hiper HPU-4B580 Type R 580W Modular ATX2.2 PSU
(included for compatibility issues with any replacements)
I run Windows 7 64bit, and the hardest use it goes through is gaming.
I've been asking about, and looking around so have come up with a list of two potential upgrades. I'm hoping some one a lot smarter than me can put my mind to rest before I order either of them (assume I know very little about the insides of a PC)
Option 1: Best and most expensive (after a lot of looking up)
AMD Phenom II X4 Quad Core 980 Black Edition "140W Edition" 3.70GHz (Socket AM3) - Retail - £119.99
MSI ATI Radeon HD 6950 OC Twin FrozR III Power Edition 2048MB GDDR5 PCI-Express Graphics Card - £239.99
Kingston HyperX 4GB (2x2GB) DDR2 PC2-8500C5 1066MHz Dual Channel - £53.99 and currently on offer.
In total it's £413.96
Option 2: Second best and cheaper (by quite a bit)
AMD Athlon II X4 Quad Core 645 3.10GHz (Socket AM3) - Retail - £89.99
XFX ATI Radeon HD 5770 Single Slot 1024MB GDDR5 PCI-Express Graphics Card - £89.99
Kingston HyperX 4GB (2x2GB) DDR2 PC2-8500C5 1066MHz Dual Channel - £53.99 and currently on offer.
In total that's £233.97
There's quite a difference in price range, but quality and performance is obviously compromised, so my two questions are -
Are both options fully workable with my motherboard and power supply?
And if so the added performance from choice 1 worth the extra £179.99 spend out?
Many many thanks to anyone who provides input on this, for me it's not an easy choice to make and I'm the sort that is so unsure about these things.
Many many thanks in advance.

Right so I've had a PC which over time has needed some love, with an up coming game release (Tera Online) I'm looking ahead and wanting to recycle as much as I could - but of course some major parts will need upgrading.
My current system is -
Asus M2N-SLi Deluxe (Socket AM2) PCI-Express DDR2 Motherboard
AMD Athlon 64 X2 Dual Core 5000+ 2.60GHz (Socket AM2)
Sapphire ATI Radeon X1950 XT 256MB GDDR3 HDTV/Dual DVI (PCI-Express)
GeIL 2GB (2x1GB) PC6400C4 800MHz Ultra Low Latency DDR2 Dual Channel Kit
Western Digital Raptor 36GB WD360ADFD 10,000RPM SATA 16MB Cache (main drive)
Seagate Barracuda 7200.10 320GB ST3320620AS SATA-II 16MB Cache (Second drive)
Hiper HPU-4B580 Type R 580W Modular ATX2.2 PSU
(included for compatibility issues with any replacements)
I run Windows 7 64bit, and the hardest use it goes through is gaming.
I've been asking about, and looking around so have come up with a list of two potential upgrades. I'm hoping some one a lot smarter than me can put my mind to rest before I order either of them (assume I know very little about the insides of a PC)
Option 1: Best and most expensive (after a lot of looking up)
AMD Phenom II X4 Quad Core 980 Black Edition "140W Edition" 3.70GHz (Socket AM3) - Retail - £119.99
MSI ATI Radeon HD 6950 OC Twin FrozR III Power Edition 2048MB GDDR5 PCI-Express Graphics Card - £239.99
Kingston HyperX 4GB (2x2GB) DDR2 PC2-8500C5 1066MHz Dual Channel - £53.99 and currently on offer.
In total it's £413.96
Option 2: Second best and cheaper (by quite a bit)
AMD Athlon II X4 Quad Core 645 3.10GHz (Socket AM3) - Retail - £89.99
XFX ATI Radeon HD 5770 Single Slot 1024MB GDDR5 PCI-Express Graphics Card - £89.99
Kingston HyperX 4GB (2x2GB) DDR2 PC2-8500C5 1066MHz Dual Channel - £53.99 and currently on offer.
In total that's £233.97
There's quite a difference in price range, but quality and performance is obviously compromised, so my two questions are -
Are both options fully workable with my motherboard and power supply?
And if so the added performance from choice 1 worth the extra £179.99 spend out?
Many many thanks to anyone who provides input on this, for me it's not an easy choice to make and I'm the sort that is so unsure about these things.
Many many thanks in advance.