Actually, he's at one of the 3.2's, and if it's true dual core it won't bottleneck THAT badly. An Atom 330 (dual core with HT) at 1.6 is about equal to a 2.4ghz Pentium D. (single core with HT). I would be shocked to see Crysis use more than 70% cpu on both cores with something like a GTX 460.
My concern would be is the power supply up to a modern processor -- is that machine even ATX12V? With that 3rd generation Radeon that really doesnt' sound like it would be - that's probably plain-jane ATX and it sure as shine-ola ain't gonna have no 6 pin or 8 pin power plugs. Even a three year old card like the Ge8800 would probably pop that sucker like a blister in a sandstorm.
Given your RAM, likely power supply and overall age -- save up for a new build. Get about a grand together, you'd be surprised at just how much machine you can put together... You don't need to blow the bank on it.
I5 2500 -- $205 -- More processor than you'd need for any current game or anything of the next four years...
Asrock 1155 mainboard - $88 -- great little board for bargain builds. So long as you're not planning on filling it up with cards, it's overkill for 99% of normal users.
8 gigs (2x4gb) G'Skill RAM -- $77 - cheap, reliable. You don't need anything more unless you want to screw with burning out the computer prematurely.
Antec Earthwatts 750 - $80 - a 750 Antec is a 1000 from anyone else. Should handle any single video card you'd plug in and many SLI rigs on lower cards. (I wouldn't try to SLI Fermi on it)
MSI Twin Frozr GTX 460 - $150 -- What I consider an entry level gaming card these days, it''s more powerful than the GTX 285 of the previous generation and offers some DX11 features (NOT that ANY card delivers DX11 at this point as anything more than a slideshow!) -- this will run Crysis just fine at most any "normal" resolution (aka 1680x1050 or less) on high to very-high settings, and can be made completely playable at a mix of certain med/high/vh settings at 1920x1200 -- on any game where the engine isn't trying too hard (Batman:AA, Borderlands) there is ZERO reason to need anything more unless you've got a raging chodo to run it at 2048x1536 or higher.
Toss on a decent case for $50 and a $120 or so for a new hard drive in a decent capacity, and it's not even broken the $800 mark with shipping on it. Use your current display, key, mulse and optical... or toss an optical on there as a CD drive shouldn't cost more than $30.