I second this almost to a tee. If you can get a good enough overclock the bottleneck will be minimized, but it will still be quite noticeable in those more CPU dependent games where you want to push higher frame rates at high settings.
The DDR2 memory will most definitely bottleneck however.
I think you should upgrade to an i5 6500 along with DDR4 RAM and a new motherboard, as you're long overdue for an upgrade.
This is essentially what you want, it will last you a good 4 years before it becomes outdated, but even then it will still keep up with the latest titles.
PCPartPicker part list:
http://pcpartpicker.com/list/fhBm99
Price breakdown by merchant: http://pcpartpicker.com/list/fhBm99/by_merchant/
CPU: Intel Core i5-6500 3.2GHz Quad-Core Processor ($199.99 @ SuperBiiz)
Motherboard: Gigabyte GA-H110M-A Micro ATX LGA1151 Motherboard ($53.88 @ OutletPC)
Memory: G.Skill Ripjaws V Series 16GB (2 x 8GB) DDR4-2400 Memory ($59.99 @ Newegg)
Total: $313.86
Prices include shipping, taxes, and discounts when available
Generated by PCPartPicker 2016-07-18 04:41 EDT-0400