Personally, I would get a ~24" 1080p display first since the higher resolution and display area are always useful for something. You might not be able to play games with everything on ultra but you can always upgrade the GPU for that later. With new GPUs getting introduced each year, you might be able to get better bang-per-buck on the GPU by the time you get there.
If you upgrade the GPU first, you might not see that much graphics quality improvement since your display lacks the resolution to show it and unless you upgrade the display in the reasonably near future, significantly better GPUs will be available for the same price.