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How to upgrade my HP laptop?

I own a Pavilion dv4 notebook PC by HP. I've owned it for 3 years. Its getting a bit outdated but I was wondering if it would be cheaper to just add more RAM, install a new graphics card and if there is a way update the processor. Its moving okay but the newer games run slower on it because its outdated. Does anyone have any tips or ideas on how an average computer savvy person can do this or should I just go out and buy a new one?
Windows Vista operating system
FingerPrint scanner
Web Cam
Centrino 2 processor
DVD-RW and CD-RW
Light-scribe installed
3 working ports
WiFi internal
Not sure how much memory
My biggest complaints are that the graphics card maybe needs to be replaced and newer games I.E the Sims3 have to be run on lower settings to run properly.

Adding extra RAM is a fairly easy task. However, upgrading the GPU (graphics card) is most likely NOT an option as very few laptops have removable graphics cards. And for the few that do, the choices for an upgrade are VERY limited (and expensive). You will probably be much happier by replacing the laptop with a more "gamer friendly" version.

HMX-S16 Samsung Wi-Fi Full HD Camcorder

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