The problem you will come up against in only upgrading the chip is mobo compatibility. Not sure what kind of mobo you are using or what kind of chip you are looking to get. Dell's are natoriuos for putting in mobo that can not be upgraded too much. Since they want you to but more of their pc's. Don't get me wrong dell does put out good pc's for a low price, but there is a reason that they have a low price.
In the end you might end up paying more just to get compatible parts needed to upgrade than to build your own. Me I would build a new one. That is of course up to you.
dfi nfII ultr infinity/asus p4s800
amd 2500xp m/p4 2.6
ati 9600/ati 9600 pro
512mb pc3200/512mb pc3200