Summing it up for OP: there is no definitive answer as to what CPU you should upgrade to. The major criterias here are your needs, purposes you're gonna use this CPU for and your budget. Consider all points that were expressed by me and Angad and make your own decision.
One more important thing to consider though in addition to what has been said above: Purchasing CPU is not usually a short-time investment considering expensiveness of CPU itself (not like GPU, RAM, or mouse) and expensiveness of the process of upgrading your CPU (usually, along with CPU you have to upgrade MB at the minimum). Think about how you're gonna use your new CPU in a long term... What I mean is, now, for instance, you are using it for gaming only (which means, single-threading should be enough as Augud frankly pointed out); however, if in one year you fall, for instance, into graphic design hyper-threading will be a must. You're gonna what, buy new CPU (and along with it MB and other stuff ending up in $300-$400)? I have been having old ass i7-950 for 3 years now and I'm pretty happy with it and not planning on changing it. It was more than enough for gaming only. I could've bought i5, but I considered the possibility that I'll be working from home often and bought this CPU...
So, in two words - think long term.