Whoa lots of ideas from people. His board doesn't support 1066mhz ram, so that's a pretty poor solution.
I'm with you on 965 chipset being the problem. Quads are difficult to overclock at the best of times, they've hit the limit of what fsb can do. I'm on a P45 board and it struggles, X38 boards don't tend to make it over 420 fsb. The gigabyte you're on doesn't stand a chance.
You could change board. This is a fairly drastic measure when looking for an extra 600mhz. So yes, if you are unhappy with current performance, I believe you're going to want to upgrade ram/motherboard/cpu. Beyond that, choose your poison. Q9550 are beautiful and pretty cheap at present, otherwise phenom 2 or i7. Significant point is that you don't need an entire new system, your case/gfx card etc are fine
50c idle is a very bad thing. Under load thats going to be very hot. I think you're better off leaving it at 3ghz