Is this a signifacant upgrade?

It would be very significantly better. That is pretty much the faster processor out right now for less than $500. What are the rest of your specs?

An i5 2500k will suit you better for gaming. The added benefit of an i7 is hyper threading, which games do not utilize. You'll save $100 going with the i5.

You will need a new copy of windows if you are getting a new motherboard, too.
 
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1GB Galaxy gtx 465, 8GB ddr2 I believe, Corsair TX 750w, I think right now my processor is the weakest part of my system, and that I would need a new motherboard to fit a new cpu.
 
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