Theoretically, processor actually is more important at lower resolutions, as your video card will probably be bored at 1600x900. So your actually FPS will have more to do with your CPU than that ATI 5850.
To be quite honest, unless you wish to upgrade the monitor, I'd ditch the ATI 5850 and downgrade to something less expensive, and buy yourself a better processor.
Quad Core is where it's at these days, and will keep you from having to upgrade for quite a bit longer. Video cards are easy to upgrade. But moving up in the CPU scale sometimes means replacing motherboard and memory too. Albeit AMD is decent for that since they seem to be re-using motherboard chipsets/socket types with their newer Phenom II's.