I'd say to skip past the 265s even though you'd have real dual cores instead of hyperthreading on your side. Quad core Xeons are coming down and you can find them in dual socked configurations for relatively low prices now days, and even a single socket Kentsfield would outrun what you have now and most likely a 265 system. 265's are a bit dated now, the release of socked F (1207) has been out for quite some time and you should be looking at Opteron 22xx or better machines if you're in the market for an AMD.
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If you have options Xeon 2.8GHz and Opteron 265 only, I would definitely upgrade. It's much better from my experience. Otherwise, as suggested, take a look at Intel Quad-core CPU. You will be very happy
The Opteron 265 will probably perform better, but by a slim margin. If the Xeon is showing it's age, this Opteron is no baby. The Opteron 265 is almost 3 years old itself. I would look at faster options to be honest, there's plenty to be had.
Even a middle-end single CPU (dual or quad core) from late last year will outperform either of those by a wider margin than you're comparing now.