Prices between socket 939 and 754 are close anyway as are the chip prices, so you may as well go 939 for dual channel ram
DDR 2 is very expensive and reviews ive seen now a huge lot faster then ddr
http://www.overclockers.co.uk/acatalog/Corsair_XMS.html top pair nice
3500 venice core would make a nice chip or if you want to spend a bit more either the 3800 san diego or 4000 of the same would do well
The x800 pro is a very nice card if you can find the powercolor it can be unlocked to xt pe (ask bifta about this) To get an nvidia as good your looking 6800gt ish
As far as hdd is concerned they are so cheap now so i would say buy a sata
In my opinion if you go with anything close to what ive said above there is no way your going to be disapointed,64bit chips fly and no doubt
You could keep you old system on a network and use it as a file server or a media centre or loads of other uses
Only problem is £400 will not buy all these parts but it would be money well spent