Desktops: Another Upgrade or Buy New Question from Me

Another Upgrade or Buy New Question from Me

My father has an old PC that is comming up to 5 years old, it is running okay and it has had a large number of the parts replaced inside under warrenty but it is running a little slow. I think the only part that hasn't been replaced under the warrenty is the motherboard and possibly the CPU.

The setup is like this (aproximatly, can't be bothered to look up exact details for him)

1.5GHz CPU
40GB Hard Drive
256MB RAM
XP Home Edition

Now, although the PC is old, he only uses it for Word Processing, internet and other basic tasks. Nothing too demanding. Now the upgrades we were thinking of were along the lines of upgrading the RAM to 512MB - 1GB (Proberbly somewhere in between if it has two slots because we'll leave the 256MB in and add a 512MB stick)

Possibly double up the hard drive space but he's also considering buying an external one for backups so it may be cheaper just to buy the external one and have that as extra file storage if we buy big enough. The question is, is it safe to backup files under a second external hard drive if it has the expansion slots?

So, the question is, Upgrade or Buy New? The upgrade to 1GB of RAM should have a reasonable effect, I added 512MB to my machine a few weeks back and it made a massive difference. Also, would a CPU upgrade be sensible?