Is it worth building a new computer?

I have a pc with a P4 cpu and outdated AGP type gpu. Its around 6 years old. I want to build a new rig with a e5200 and with more modern but still economically priced hardware. it should cost around $400. I don't want to dish out money for a core i7 setup yet until after college. Is it worth building a new pc around a e5200? how much better is it than the P4 i am using?