Yes, processor is worth upgrading, and you can't have enough ram, but 256 will usually do.
The best price/quality processor is an Athlon XP 2600+ . Over here it's about 120€, fair price imho. If it'sa monster processor you want get a pentium4 3ghz, 510€ LOL.
Athlon XP 2600+ it is.
(€= slightly more worth than USD, in case you wanna compare)
P.S. ram is relatively cheap, load up on it as much as you can