Since you've got a good package already and are moving towards more data/CPU intensive processes, I would just simply free up the bottlenecks you have now.
Upgrade the hard drive to a Hitatchi 100GB 7200rpm and go for 2GB of RAM.
I've seen enoegh reviews of 5400 vs 7200rpm drives (same capacity) to make my own conclusion and confidently say it is a worthy upgrade. The 7200rpm drive did wonders on the desktop...so why not with the laptop. People are going to argue that the faster drive won't make much of a difference.....but in your case, because Photoshoping requires a lot of read/writes to the disk, a 7200rpm hard drive will shine in this environment.
Let me share my experiences with RAM....
I'm a minimalist when it comes to programs so I try to run as few programs as possible. My computer is loaded with 768Mb of RAM with my paging file turned off, everything runs like butter even after multiple opened windows, itunes, and the usuall. As an experiment, I decided to pull 256mb out leaving me with one stick of 512Mb.
After restarting, opening iTunes, Firefox and 5 tabs set to your common webpages (Myspace, Yahoo, NotebookForums, other forums...etc), A "Low Virtual Memory" warning popped up and my computer froze.
In short...."YOU CAN NEVER HAVE TOO MUCH RAM"
Again...since you are running Photoshop more often, 2GB of RAM would definately help when your computer REALLY needs it. I wouldn't suggest turning off your pagefile like I did while running PS though.
I think your Pentium 740 is a good processor already. The Dual Core processor is definately going to help in the Photoshop environment since multi-threaded performance is where the Dual Core really shows its colors. However....I would hold off at least 2 more months before splurging on a new computer since your current crop of Dual Cores will start to change once again with AMD and Intel releasing there full 64bit dual cores.
Also, the video card in your lappy now should be fine for your work now, especially since your gaming habits have decreased a bit.
TIPS: I've heard that changing your Processor Scheduling to background services (instead of programs) is better for those doing video and sound editing because rendering takes place in this realm. I don't know how processor allocation is needed for Photoshop processes, but it's a simple step you can try and always revert back to if you want.
Right click on My Computer - Properties - Advanced tab - Performance settings - Performance Options advanced tab - select "background services" and click OK. Restart and see if things are a little faster in Photoshop.