I would get a loan and do both!
Seriously, if you could use some stuff from the old computer but have a mobo that would handle both DDR2 and DDR3 it is do-able. DDR3 if you check specs really isn't worth the extra you get out of it right now. And I don't know what else you do with the computer but SH relies on a good video card while other games don't. I have a Gigabyte P965 Mobo right now because the 35s and 38s are not up to snuff right now. They are not getting enough of a %tage of increase to justify the extra cost or replacing what I have. I got 2GB of dual channel DDR2 800mhz Corsair XMS2 (which is one of the best as far as I am conserned.) And I got it at Newegg for $49 after rebate. Try comparing that to DDR3. Right now there is matched pair of 2X1GB Corsiar for $34. But check the mobo specs some of the boards need 1.8v, these are 2.1v. The DDR3s that I am seeing are over $200. And the RAM is not that big a deal as much as the Video card. The increase in speed, because other parts come into play ,right now is not signifigant. I would wait for the next big jump and lower prices and consentrate on the video card for now. Just my 10 cents..(inflation) I just checked and you can get the 800mhz for $34 right now, the 1.9v and this stuff is fully capable of overclocking. And most Gigabyte boards are too.
As for a surround sound system, my son in law and I have seem them all. (not really) and unless you have a theater specifically set up for this again the baddest system in the world isn't going to make as much difference as a properly set up room. Acoustic wise that is. So you can get system a bit under $1000 that are just as good in the normal home. I wouldn't go with el cheapo set, that will not be as good.
Anyway just my opinion.
Peabody