If you get an AM2, your going to have to replace your ram to ddr2.
New CPU, RAM, Motherboard.
It's almost like replacing a whole system. Only thing missing is the videocard. And you can reuse the hard drive.
If I were you, I would just save up and just get a whole new system, I wouldn't bother upgrading the cpu since your current computer is still decent. Plus, by getting a new system you get 2 working computers.
Just do some OCing if you just want a faster cpu.