Do I need a new CPU or video card to run the newer games?

I'm wondering on which one I need. My computer specs are the following:
[FONT=verdana]You Have: Intel(R) Core(TM) i3 CPU 540 @ 3.07GHz[/FONT]
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You Have: 3.1 GHz (I should have 4GB RAM, not sure how some of it got used)
You Have: Microsoft Windows 7 Home Premium Edition Service Pack 1 (build 7601), 32-bit
You Have: GeForce GT 430
RequiredYou Have
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Pixel Shader version 5.0
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Vertex Shader version 5.0
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Dedicated Video RAM 1.0 GB

You Have: NVIDIA High Definition Audio
I cannot run ANY of the newer games, even on the MINIMUM settings. I consider myself PC hardware-incompetent, so can someone tell me which parts I need to upgrade, and which are just fine.
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First thing you are limited to less than 4GB when using a 32-bit operating system. If you want to use all 4GB of memory you will need a 64-bit operating system.

To answer your question, I would say both CPU and GPU needs upgrading. (I am assuming you have a desktop and can upgrade since you don't have a mobile version of CPU)

Maybe get yourself an i5 for the LGA1156 platform, something like an i5-650.
And then upgrade the graphics to GTS-450 or better. Better yet upgrade to the current AMD HD 7000 or nVidia 600 series and get a GTX-660 or better. Keep in mind though that a GPU upgrade could also mean a power supply upgrade would be required.
 
If your budget is limited and you had to choose between a GPU or CPU then I'd definitely get a new GPU, that GT 430 is very weak. A new CPU will be quite expensive as LGA1156 is now a legacy platform, unless you pick up a used one from ebay or similar.

It would be useful to know your budget though.
 
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