Look here and notice where the CS5 machines are, even when marked MPE off, PPBM4 Benchmark
The drawback of your current system and the material you use is that you almost have to get a new much more powerful system, irrespective of a possible upgrade to CS5. So a fresh install will be required anyway. Might as well go to 64 bit in one step.
Just my opinion but I wasn't a million miles away from your system when I decided to take the plunge and upgrade earlyish to CS5. I did my upgrade with a simultaneous upgrade of Windows XP to Windows 7 64, Graphics Card from NVidia 8800 GTX to NVidia GTX 285 and 4Gb RAM to 8Gb RAM. The main difference for me is the GPU accelleration (albeit you will still have a major problem with this until apparently the next release as there is a bug which means cross disolves on a split clip won't play - this is so annoying it's untrue but apparently a fix is due but AVCHD editors are tearing their hair out on this, I've practically had to stop editing on PPro) and I often use 2 layers of AVCHD and there is no problems with playback now although render times are still very long. Apart from the above mentioned bug there is a vast improvement with being able to play the timeline but as Harm has indicated, you will need to upgrade your spec and your graphics card to achieve this. I wouldn't upgrade to CS5 without the other system changes in my opinion as CS4 was coping adequately and probably as well as CS5 will.