Upgrading? 3 year-old Mac Pro 3.1 with 8 GB RAM

I have a 3-year old Mac Pro (model 3.1) with 8 GB RAM and 2 Quad Core Intel Xeon processors. The RAM consists of 8 x 1 GB 800 MHz DDR2 FB-DIMM
Two questions:
1) I need tp upgrade my RAM to 16 GB or more to run a new software (memory intensive application). I'm wondering if it's worthwhile to upgrade this system for ~$500 or just buy a new system with newer components. Also, whether the system can effectively use 16 GB of memory
2) Recently my Mac Pro has been very slow and jittery e.g. when I switch between applications.  I've already tried things like cleaning up the hard drive / repairing disk permissions with little improvement. The only other thing I can think of doing is wiping the system clean and reinstalling everything. I'm wondering if anyone has had a similar experience, and if there is asomething to do to prevent this from happening in the future.
Thanks!
-H

you can max out at 32GB
An SSD can make a difference also
Hang in for what/when/if the MacPro6,1
Memory bandwidth OWC
I would add 4 x 4GB to get to 20GB and see how that goes.
Upgrade the hard drive: SSD or 10K WD VR 600GB or something.
Off load your home media data and such to another drive, and go for a lean-mean OS/Apps only boot drive.
Buyer's Guide: Hard Drives for Mac Pro
How To clone

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