Okay First for the CPU.
What you said about the i5 and i7 cores is true, they are still expensive and there isnt a huge performance change between C2D or C2Q and the i series if youre not really gaming or running any graphical intensive apps.
Another thing is that Core 2 based cpus have an LGA 775 interface while the i7 and i5 have the LGA 1366 and the i3 has the LGA 1156. I personally recommend to get an i3 series processor and a motherboard that supports it, because they are a cheap option and the price will be somehow similar to a Core 2 config.
So i recommend: -Intel Core i3-530 Processor (4M Cache, 2.93 GHz)
For AMD, their main line of current desktop processors is the AMD Phenom II multi core. Phenom II X4 or X6, the motherboards thats support them tend to be more expensive than the Intel mobos, but you can still find good deals on them.
Now about the 64bit or 32bit issue.
I personally run a 64bit OS on my pc and i have never had any problems running any 32bit software. All 32bit software run fine like they should. My opinion is that you should go for 64bit right now, 32 bit is just becoming obsolete in terms of memory upgrading.
And yes its mostly true that 32bit system only support 3GB of RAM, sometimes 4GB maximum it all depends on the motherboard you are using.
Memory
If you are using a 64bit OS, you will be mostly limited to 16GB maximum of RAM, (some Mobos even accept 24gb of RAM now i think, not sure)
The difference between DDR, DDR2 and DDR3 is the core clock frequency, Latency and power consumption.
They have different specs including I/O clock, core clock, transfer rate, and a cycle time.
DDR has the slowest core. There are DDR-100, DDR-200... and the DDR-400 for example. (400 represents the data rate)
The DDR-400 which is also called PC-3200, it has a 200mhz core clock and a 3200 mb/s peak transfer rate.
The DDR2 have also many variants and versions, the most recent is the DDR2-1066 (1066 being the data rate) which is also called PC2-8500. This one has a 266mhz core clock and a peak transfer rate of 8500mb/s.
The DDR3 is the same thing, many versions and most recent is the DDR-2133 aka PC-17000 which has a 17000mb/ peak transfer and obviously the data rate is 2133 mt/s.
Check these module tables for more info
http://en.wikipedia.org/wiki/DDR_SDRAM#Chips_and_modules
http://en.wikipedia.org/wiki/DDR2_SDRAM#Chips_and_modules
http://en.wikipedia.org/wiki/DDR3_SDRAM#Modules
To sum this up, go for DDR3 RAM modules, they are faster now and are supported by most of the modern motherboard including the one i will chose for you below.
You should go for 4GB of DDR3 ram right now, you can upgrade later as much as you want.
Also the reason that DDR is expensive i that its not manufactured anymore so retailers tend to increase their prices as they become rare to find.
Motherboard
You should look for a mobo that supports your CPU's interface which is LGA 1156, RAM capacity and types, extra feats like integrated sound and LAN. Extra ports on the side, USB ports, esata ports, number of SATA II ports, expansions like PCI express (16x and 1x speeds) and PCI used to add a video card or a sound card or anything similar.
Now if i had chosen the Core 2 Duo or Core 2 Quad processor you should look into the LGA 775 motherboards.
I chose the - Intel DH55HC motherboard.
DH55HC overview
This one supports The i3 cpu and the DDR3 ram modules.
For the video cards, i dont think you need the hassle to buy an external video card, you wont be running any 3D apps. The i3 has an integrated Intel HD graphics chip (codename Clarkdale) which takes care of video processing. I have seen a few benchmarks and i have to say it can keep up with mostly everything 2D, 3D apps would just kill it.
If you are looking for a dual monitor setup, here i suggest you get a dedicated video card, as you need two output connectors to connect both of the monitors and performance will better in higher resolutions.
A good and Cheap Video card would be the ATI Sapphire HD4650.
You can still dual without the need of an extra video card though, performance wise it wouldn't be good.
A few extra things, do you need a new Hard-disc ?
Chassis ? Power-supply ?
