I recommend doing a little research first. is this a system that you had someone build for you, or was it a complete system that you purchased at a store?
- If it's the former, try contacting the person that built it for you to get the specs (motherboard model name, etc).
- If it's the latter, you would have to look up the manufacturer and model number on the net along with "mobo" or "motherboard" and try getting the motherboard model number. If that doesn't work, you may need to crack open the case and see what model number the motherboard is.
With this information, you can then look that up on the Internet and see if there's a specification for the fastest CPU that it'll handle. Based on what you posted, the 1.6 probably resides on a motherboard that's too old to take one of the newest chips out there. But you have options.
My philosophy is to let the application designate the platform/hardware. Do you want to play the latest games and games coming out next year? Are you doing video editing? Are you needs more simple, as in doing web-browsing, email, casual games with low-requirements? If you are keeping it simple and your mobo accepts a higher upgrade, you might be able to swap your CPU for the faster one, but you may not notice a speed difference at first.
The RAM on your motherboard has a ceiling as well as to how much you can install. If you want more memory, there's no issue purchasing more. But if you want to do the more CPU-intensive operations like more gaming and video editing, you may want to invest in faster and larger RAM, which will probably require a newer motherboard and a different CPU. RAM's pretty cheap nowadays. I picked up two 4GB sticks for $40 after rebate in August of last year, and they've been coming down even further recently.
Do you want larger and faster hard drives? See if your motherboard has IDE ports, SATA ports or both. With SATA you can even add solid state drives, which are like a huge flash drive in your computer and a whole lot faster than standard hard drives.
In conclusion, determine your needs and your budget, and work around that. Think about the future and if you'll be satisfied with the same speed 6 months or more from the time you upgrade.