I don't know how much you have to spend, Nathan... But, one way to accomplish your upgrade would be:
Intel Core i5-2400 (Sandy Bridge, quad core, 3.1GHz, locked multiplier) - $189 US
OR,
Intel Core i5-2500K (Sandy Bridge, quad core, 3.3GHz, unlocked multiplier, better graphics) - $220 US
OR, if you want,
Intel Core i7-2600K (Sandy Bridge, quad core, 3.8GHz, unlocked multiplier, better graphics, hyperthreading) - $315 US
ASUS P8H67-M Pro (Intel H67 chipset, HDMI and DVI out, USB3/SATA6, MicroATX size) - $120 US
SilverStone GD05B HTPC Case - $100 US
Then, you should be able to reuse the Power Supply, hard drives, and video card out of your existing rig (the motherboard also does use on-board Sandy Bridge graphics, but if you want something better, the board does have a fully functioning PCIe 2.0 x16 slot).
Those are just examples, of course. There are, of course, a range of different MicroATX motherboards and cases available. That SilverStone is nice though. For SandyBridge motherboards, I'd look at ASUS right now, as they have the best BIOS setup currently.
The main difference between the quad-core i5s and quad-core i7s is Hyperthreading (the i7s show as 8 virtual cores). The new version of hyperthreading does work better than the old Pentium 4 version, but it is still a mixed bag. Often you gain a few percent in average workloads. Some workloads scale well (are threaded poorly) and gain more. Some workloads (usually ones that are heavily threaded) perform badly with hyperthreading and it actually works against you. The i7s also have a bit more cache, but this has been shown to have a minimal impact in everyday use. If it were me? I'd get the i5-2500K no question. The Core i5-2500K has an unlocked multiplier (that's for overclocking, instead of raising the base clock, which is hard on sandy bridge, you can just raise the multiplier, which is easy).
The other thing to look at with Sandy Bridge chips is the type of graphics logic included. There are two: the "2000" model, and the "3000" model. The i5-2500K I linked above, and the i7s, have the 3000 model. This doesn't matter AT ALL if you'll be using discreet graphics anyway. However, if you think you might want to use the onboard graphics, the
3000 model is MUCH better, but still pretty crappy by discreet standards.
Also, I forgot to include RAM above. You'll need some DDR3 sticks.
Don't buy fancy ones.