Below is a good guide to the basics of overclocking the C2D and C2Q chips. It's not really all that complicated and will definitely prolong the life of your CPU. Often it will buy you another year or so worth of performance if you overclock well, and by that time you will probably want to go with a new motherboard RAM etc. as well.
As some of the folks above have said, for the games you play it may not be worth spending that much money on a new processor when you pay still be able to squeeze out more performance on your current chip. The other thing you have to consider is that the LGA775 socket that the Core2 chips use is now more or less dead. So do you really want to spend £150+ on a socket that won't have any more upgrade paths after the C2Q? Realistically, how long will it be until you want to upgrade your system again, maybe with DDR3 memory and a new motherboard?
It may just be worth you going for the overclock at the moment and when you do eventually decide you want to upgrade you can grab a new motherboard, memory and processor that will have upgrade paths in the future. You could go for an i5 or i7 system or if you're on a tighter budget then an AMD Phenom II X4 etc. would perform really well for gaming.
I know I've gone on a bit with those post but just another option to think about! Hope this helps!