Look at it this way. With labor and tax it will likely be almost $600, which is about half of a new system with a 4.5" bigger screen that is LED backlit, probably 2X the RAM, DDR3 RAM as opposed to probably just plain DDR, a dual core CPU, a considerably better GPU, and a much more spacious HDD.
I would say buy a new one, because your system is getting very close to the "vintage" stage of Apple's lifecycle, and once that happens, getting parts for it will be very difficult. So assuming you repair it, then something happens 6 months later, there's no telling if you'll be able to get a part anywhere besides eBay where it's a crapshoot if it'll work.
Also, since you seem to be something of a laggard when it comes to upgrading (and there's nothing wrong with that) I'd strongly recommend the AppleCare plan. That way you're covered for 3 years if anything goes wrong (and you didn't cause it). After 3 years, most repairs will probably be at the same tipping point you're at now. Repairing is close to, or more than, half of what it'd cost to just get a new system. And a three year upgrade cycle is pretty reasonable. If you can stretch it out a little longer because you're machine channels the spirit of the energizer bunny, even better.