You would definitely notice a cpu upgrade, especially with your occasional photoshop use and if you ever tried to watch anything HD on iplayer or youtube. If you were to upgrade you would also need a new graphics card as yours uses the old AGP slot. That said a lot of integrated graphics cards (but not all) are on par with or faster than your current graphics card, and even a ~£50 discrete card would blow yours out of the water.
TBH it sounds like your system is so old it wouldn't be a case of upgrading, but replacing it. Your choices are a new pc or replace the motherboard with something from ebay. If it does everything you want at the moment then a new motherboard is the cheapest option, but as you say it feels slow now and it's only going to get worse as software moves on. If you decide to get a new PC then give us a budget and we (meaning CAT-THE-FIFTH
) will find something to fit it.
The new AMD processors are aimed at people just like you
imho - an incedible upgrade over your current setup and enough grunt to last you as long as your current PC has.