I think wait til you have Oblivion; see how well it runs then if it doesn't run so great, weigh up your options then. No point spending money now if 3 - 6 months down the line you can get twice the power for the same money

That said the 'future proofing' one might be a good idea

I don't think you should upgrade.

The upgrade just isn't worth it. Though the 3500+ may be a higher performer, the raw ghz is probably nearly the same. The RAM is similar (I actually thought the DDR2 would outperform the PC3200, but I'm probably wrong) and 'future proofing' isn't all that important, really. Only when you buy your next mega-rig, and by the time an upgrade would be worth the cash spent, all these 'new' technologies should be standard.

Though I feel your pain, I've been itching for a new system, I just don't think it's worth it if you have a halfway decent box right now. I'm looking at 6 months down the line when dual core chips are affordable, the next geforce line is out, and the next level of SATA is available.