Upgrade hardware & OS?

I have a 3,1 Mac Pro, dual 2.8 quad-core Xeon with 8 GB of RAM and 1.5 TB of storage internal.

I don't know how that's classified (early 2008, Late 2008, 2009, etc) so I honestly have no idea if it's capable of running Mountain Lion, or if it's worth the upgrade. I'm still using 10.6.8.

I don't do a whole lot that really taxes the system, mostly Adobe CS. I run several Web sites, but they're all hosted CMS.

I'm torn at the moment between passing it along to my subordinate and getting a new MacBook Pro for myself, or upgrading what I can and get a couple more years out of it. If I went that route, what else could/should I upgrade? Obviously more RAM, but what about GFX card options and other components?

Any thoughts? Can I also upgrade to Mountain Lion, and if so would that be a beneifit or a hindrance, in terms of performance?