I'm not sure what 2.5K will buy, depending on your class of hardware. Tearing out the MB is OK, I guess. Never done it on a server, and not sure what level of reinstall you might need to make since the underlying HAL drivers change. I'd be very nervous about bringing this back up.
First thing on the disks is that you want more spindles I'd shoot for at least 3 separate arrays if I could preferably RAID 1 or 10 to provide some safety as well as speed. The reads from R1 will likely be quicker, so this can be a good investment. Perhaps a 6 or 8 drives would be a good spend, and I bet you could get those for $1k, depending on if you need a new controller card(s) for this.
RAM is the next thing I'd add, though it depends on where your cache hit ratio is. Is it over 90%? Do you end up hitting disk very often? If not, then not sure this will help, though I wouldn't go less than 8GB these days.
It doesn't make sense to go less than dual core, though I think I've seen a few people post that a dual socket, quad core made the most economical source. A quick DELL price on a T410 gets me $1900 with 8GB, 2, 6 146GB 15k drives.