That's a CPU. It's most likely not really necessary, and probably won't help as much as luigy69 may be lead to believe. Very few games rely REALLY heavily on it, to the extent that a bad CPU will actually lag it. Most games run just fine on midrange CPUs, and those that don't were released quite recently.
The most important thing for shaders, and for most gaming in general, is the GPU, albeit your 2 GB of RAM could be bumped up to 4 without any worries. (Don't add more RAM, replace it completely. It's much easier to replace all of the RAM than to try and work out compatibility.)
I'd recommend you go higher on the GPU spectrum, since you can get better cards that the 9800 GT for very reasonably higher prices. The GTX 460 is a very solid card in that respect, and has a price in the $150 range. Of course, double check that your PSU can actually handle a newer GPU.